How a Hidden Defect Killed the Sale of a Gorgeous House — Twice! PLUS — How to Handle Earthquake Damage in a Home Sale

Eric Stewart February 14, 2017

Hidden-Defect-Earthquake-Damage.jpgFull disclosure of a property defect will help increase buyer confidence that you are dealing fairly; and it will protect you from legal problems later. I had a challenge with one of my listings. It was a beautiful, desirable property, in an excellent neighborhood, on a very pretty lot. As it turned out, something serious came up during the home inspection.

This was a very well built house by a fine builder named Gruver Cooley. The house had an addition added 25 years ago by a different group.  Permits were pulled and the seller enjoyed the additional space without worry. We put the property up for sale and had immediate interest. The first buyers we contracted with did an inspection of the property and decided not to move forward without saying why. The agent would not discuss with me the reason. We figured they got cold feet for personal reasons. We reactivated the property for sale again. Upon completing the inspection the second time, the second buyers also decided to terminate the contract. But, this time the buyers gave us a copy of the home inspection.

We learned that the addition and the original house were not tied together correctly. The support underneath the addition, where it met the original house, did not serve its purpose.  There was stress cracking on the back side of a pillar underneath the addition.  

Why hadn’t this been discovered previously? Nothing had given way yet. The floor between the addition and the original house had not cracked so nothing had adjusted downwards. There was no drop in the floor and there was no exterior evidence in either the brickwork or the woodwork or even at door jambs or window casements that would have given an indication that there was a problem.  It may have taken another couple of decades to happen but eventually that pillar would have given way.  

We brought in a structural engineer to assess what needed to be done. The engineer defined the amount of weight in the section that needed to be supported often called the load. The builder who added the addition had not put the proper tie-ins from the pillar that they built to support the addition. Fortunately, we didn’t have to build a new pillar, but modified the existing one. The engineer provided the prescription of work needed which we gave to a competent licensed contractor to complete. The contractor put in framework to attach the old house and the addition to the pillar and pointed up the pillar – which meant added concrete to the existing crack, which was not very significant at all.  All done for about $1600!  It was all good, thumbs up, disclosure made. We found the issue and resolved it. Now the seller had a clear conscience and could move forward. We put the property back on the market and the third time was the charm as the next buyer bought without a hitch.

Earthquake Damage?  No Problem. 

The real estate business is always interesting. I have enjoyed nearly 30 years in the business. Every buyer is different. Every seller is different. Every house is different. 

I sold a home in Fairfax Station, VA. When I first went to the house it was a complete and utter mess on the inside. The owner was a delightful widow who had become isolated and the house was overwhelmed and had mold and water leakage in the basement as well as numerous cracks in walls. The ground had settled from flat to 6-foot wide two deep holes in places and had settled in the back yard significantly. When I asked the seller why the ground had dropped, she said it happened after the 2011 earthquake that struck near Washington D.C.  

I checked with my main broker on what proper disclosure should be and also spoke with a few attorneys who told me that a simple disclosure is best as I don’t know what actually happened and frankly the seller wasn’t sure. AS long as the seller disclosed that there was earthquake damage, the prospective purchaser would then be on notice to do investigation to their satisfaction prior to completing the purchase. In order to sell the house, we took it to the “as is” market. This means that we advertised the house to be sold in “as is” condition only, while making proper disclosure. We also chose to place the property for sale at a price that reflect the probable work need to be completed to bring it back. We were overwhelmed with interest. Many thought it was too much work but many saw the value. We generated numerous offers and sold well above list price and didn’t have to worry about condition. We were able to sell it with 11 offers. Multiple contracts jumped the price up roughly $30,000 above the list price. 

The visual impediment of a crack going down through a pillar, in the previously discussed house, frightened people. You couldn’t see it unless you got into a crawl space and then turned around and looked the opposite direction with a flashlight. It was post contract discovery that scared people away. The earthquake damage in the Fairfax Station property was obvious to the eye and was disclosed up front as known. Therefore everyone knew up front what to expect. 

Tip for selling your home

Real estate! What a business, huh? How many of you would like to get millions of dollars for your house? The reality is we’re going to get what someone is willing to pay us for the property. We need to prepare the property adequately by doing the right improvements, the 2-for-1’s. One of the top ways you can make money is by de-cluttering. Get rid of the stuff that you do not need any longer. Open up the space. 

I was in a home in Northwest DC just a few weeks ago. It was a very pretty home with a nice addition off the back. The basement was over flowing with stuff. The sellers never used the basement. Before the kids had grown this was used as a rec room. The kids had played games in the basement, watched TV, etc. But as the kids left, mom and dad would just carry stuff down to the basement and put it on the couch or pile it up here and there. One daughter left home and then brought her clothes back. It cannot continue to be a dumping ground for things unless we sell it in the quiet listing or on the “as is” market.

You need to prepare by decluttering, creating the feeling of space on the inside of the house. Get rid of that stuff. My Right-Sizing Guide will give you ideas on how to get rid of the stuff you’ve got. You need to declutter. Work on the floors, which means that if you need to replace the carpet, it’s a 2-for-1. If you spend $3,000, it’ll be worth $6,000 in the price. If you spend $5,000 on the floors, it’ll be worth $10,000 in the price. It’s just the way it works, folks. Same thing on the walls, painting the walls, cleaning the windows, it’s a 2-for-1. You put $3,000 in. It’s worth $6,000 in return on the price. There are other changes of course that you could make, which I cover in the Market Ready Guide, which you can download for no cost. And, for those of you who like the idea of selling “as is”, download the As Is Guide.  


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