To understand how structural damage affects the value of your home, you first need to understand how the value of a home is determined. Simply put, the value of anything is whatever someone else will pay to own it. When buying a home, prospective buyers (and lenders) take into consideration the value determined by a professional appraiser. That appraisal can value a home at a far lower than expected amount if there is any structural damage to the home.
The appraiser is a professional who doesn’t stand to benefit in any way from the sale of the house. They get paid the same fee no matter what the value of the home is determined to be. The appraiser will determine the value of the home by comparing it to recent sales of similar homes nearby, and a visual inspection of the inside and outside of the house. Since any structural damage or other damage to the foundation affects the stability of the whole house it also affects the value of the home – sometimes by quite a lot if there is a lot of damage, or if the damage is severe.
What Is “Structural Damage”?
Structural damage is damage to the foundation or other main components that support a house or other building. USLegal, citing 24 CFR 203.200 [Title 24 Housing and Urban Development, Subtitle B…] defines structural damage as “the actual physical damage to the designated load-bearing portions of a home…to the extent the home becomes unsafe, unsanitary, or otherwise unlivable.” Included among specifically identified load-bearing components are footing and foundation systems, load-bearing walls, roof framing systems, and floor systems.
Knowing the causes of structural damage, as well as signs that would indicate the early stages of damage, can prevent the more costly repairs and a reduction in the value of your home.
Causes of Structural Damage
There are many causes of structural damage to a home. Some of those are easily recognized as threats while others may be surprising. Water and wind are responsible for a large number of structural issues. Other causes that may not immediately come to mind include soil changes, termites, and even tree roots.
Water damage can occur from flooding when nearby bodies of water overflow their banks, or when the surrounding ground becomes over-saturated during a hard rain or a lengthy storm. Underground water pipes can burst and over-saturate the soil as well. Burst pipes inside or under the house can also cause damage to framing and flooring.
Damage to the roof can allow water to leak into the house and weaken framing and other structural components. This damage usually occurs when heavy rain is accompanied by heavy winds as well, loosening and/or lifting shingles and other roofing materials.
Tornados and other strong wind storms can also cause structural damage. This can be in the form of roof damage, but can also occur as the result of a tree limb or branch falling and landing on the house or hitting it as it falls. Strong winds can also move other objects onto or into a house that are heavy enough to cause damage.
Soil changes – often caused by oversaturation – can cause the foundation of a home to shift and crack. This oversaturation can be caused by the conditions listed above, but can commonly be caused by conditions that you can easily correct before structural damage ever occurs. This includes checking rain gutters and downspouts to make sure water is draining from them properly and not puddling around
Soil settling unevenly under the foundation of the house can also cause cracking of the foundation. This can occur if it is not properly prepared when the house is built.
Termites are more than just a nuisance, they hollow out wood and can cause substantial damage to the framework and flooring of a house.
Tree roots can cause substantial damage to the foundation of a home. They can break through underground pipes and even septic tanks as they grow. This can cause water and sewage backups into the house. They can also push into and under the foundation of a house causing cracking and shifting.
The cost to repair the damage caused by any of these issues can be overwhelming, but so can the reduction in value to your house if these repairs are not completed before trying to sell your home.
Signs and Symptoms of Structural Damage
The sooner you notice and address the signs and symptoms of structural damage, the more likely you are to keep repair costs low. So what warning signs should a homeowner look for?
Some of the first signs a homeowner may see that could indicate a structural problem include visible cracks in the foundation itself, cracks in the interior walls, and nails backing out of walls and ceilings. These signs may be seen sometimes as a result of settling, some of which is normal. But they can also be a sign of more extensive damage happening. If the cracks are very thin or there are very few nails backing out, it is most likely just due to normal, minor settling. However, if the nail issue is widespread or if the cracks look like stair steps and travel almost the height of the wall, it is probably time to have a professional check it out.
As more damage occurs to the foundation, you may notice that doors don’t open and shut correctly – they may scrape on the floor or require more force to open or shut completely. Cabinet doors may not stay shut, and you may notice the floors becoming uneven. You should consult with a professional if you notice any of these issues.
Monica’s Experience in Prince George, County, MD
Monica came to us here at Akin Developers after she was informed of substantial structural damage to the home she had been preparing to list for sale. The appraiser she had hired found cracks in the foundation caused both by water damage and tree roots. The damage had been getting worse over time until the estimated cost of repairs almost exceeded the amount of money she could afford to put into the house.
She had also planned to move as quickly as possible and the time it would take to make the repairs would delay listing the house well past the time she wanted to already be relocated. And because a lender would not approve a mortgage with the degree of existing damage, she decided to explore the option of selling to us. We buy houses in Prince George County and do not require an outside lender. And since we buy homes in just about any condition, we were a good option for Monica.
After our initial meeting and inspection of her home, we made a fair offer which Monica accepted. Although the agreed-upon price was less than she might have made by listing the house, she still walked away with more money than she would have if she had paid for the necessary repairs, and she was able to make her deadline for moving.
Repair or Sell to an Investor?
As in Monica’s situation, a homeowner faced with huge repair costs has to weigh all available options to make a decision that will be of best benefit to them. They must take into consideration available funds for making repairs. What if other problems are uncovered during the repair of the known issues? What might the house sell for if listed on the market after repairs are completed – will they even make a profit?
There is also the option to sell to an investor like Akin Developers, who can purchase in “as is” condition because we provide our own funding and do not have to go through the approval process for a mortgage. Not only is this an additional option to consider, but it is an option that will be much faster and not require the out-of-pocket expense the repairs would require.
Yes, structural damage can significantly reduce the appraised value of a home. But there are still options available to the homeowner. Make sure you know what those options are so that you can choose the one that is right for you.