Will fixed cracked slab distract buyers?

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Dear Real Estate Adviser,
I’m in a lawsuit with a builder because of a cracked slab that occurred six months after I moved in. I’m wondering what caused this and am just sick over this whole situation. Now I plan to sell the house, and I realize the slab fix must be in the disclosure. Is it more difficult to sell a house even if the foundation is properly repaired and warranted for life? Is this a big turnoff to potential buyers?
— Liz C.

Dear Liz,
If you get repairs done by an experienced, reliable firm and can offer the buyer a transferable lifetime warranty on the work, the fallout from the slab problem should be minimal. Most buyers will be satisfied the problem has been permanently rectified.

I say “most” because certain prospective owners simply won’t even want to take a risk on future slab problems with so much other inventory available, unless the house is priced aggressively. Also, some first-time buyers, who make up a sizable segment of the market, might be deterred by their lenders if an inspector or engineer believes there are more foundation problems ahead. This may be especially true because banks are apprehensive about lending on homes with structural issues. An engineer’s report, which can cost from $300 to $500, can help clear the way for a smooth resale as long as you follow the report’s repair recommendations.

I must say here that prospective buyers should hire their own inspector to examine a home before signing any papers on both new and pre-owned units. In the case of a newly built home, some buyers have their inspectors check every major step of the home’s construction. Of course, not everyone can afford that, nor are all inspectors well-versed in the nuances of foundations. (Find one who is, prospective buyers.)

In your case, at least you were able to take the builder to court. A lot of builder contracts have binding-arbitration agreements that supersede the owner’s right to a trial.

What causes such cracks? Sometimes it is poorly compacted dirt, and other times it’s the natural “settling of a new home” caused by the shifting of unstable soil such as clay. Sometimes it is just shoddy work done by iffy contractors. Good workmanship can prevent most cracking. By the way, sometimes it takes a year or more worth of season changes to put a new home to the test (impact of hot and cold expansion/contraction on foundations, window and door envelopes, landscaping, roof, tile flooring, etc.) However, many items are warranted for only a year by the builder, and problems often do not surface in time. Be glad yours did.

Sometimes, builders (and other sellers) try to obscure cracked foundations. Several states impose strict penalties on sellers for intentionally concealing such structural problems from buyers. Sometimes there are red flags if you know where to look. For instance, did the builder prefer you not see the place until after new carpet was laid? Or were you asked to sign a contract restricting you from publicly mentioning the name of the builder in the event of defective work?

If you do get relief after the case is settled and are free to get repairs made as you see fit, you should interview several foundation-repair firms by phone. Make sure the company has been in business for a while (ideally 20 years or so), owns its own repair equipment and uses its own workers instead of less-accountable independent contractors. As part of your research, go beyond the company’s hand-picked references and do an Internet search for problems and complaints. Contact the Better Business Bureau to see if there are many unresolved consumer issues with the firms.

Good luck!

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