Location, Location, Location (Again)

Normally, when a house has a major foundation issue, standard Realtor advice to Buyers is “run, don’t walk” (to something else).

What’s the exception to that?

If the home in question is on desirable lot in a hot neighborhood for tear-downs — and the foundation issue translates into a sufficiently hefty discount.

Exit Strategy

Even then, two caveats apply:  1) the house needs to be structurally safe to occupy,** at least in the short run (see next); and 2) the prospective Buyer’s timeline is relatively short – say, 3-5 years.

Then, the strategy is for the Buyer to pocket the discount; put no money into the house; then sit tight until it’s time to sell to a developer, who’ll tear it down.

**The Buyer’s lender (and likely insurer) will have a say in that.  If the house is determined to be unsafe, the lender will nix the mortgage . . . which will likely nix the deal.

See also, “House Problems That Will Never Be Fixed.”

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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