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Structural Engineering Assessment in Practice

10 min
4/6

Key Takeaways

  • Select a PE with specific experience in the subject property's construction type and age range.
  • Structural assessments include floor level surveys, crack documentation, plumb measurements, and modification review.
  • Four finding categories: no concerns, monitoring, repair required, and significant deficiency (potential deal-killer).
  • A negative structural report can derail financing and insurance even if the buyer is willing to accept the risk.

When visual inspection identifies structural concerns, a licensed structural engineer conducts a detailed assessment. This lesson walks through the practical process of engaging a structural engineer, conducting the assessment, interpreting the engineering report, and incorporating structural findings into acquisition decisions.

Engaging the Structural Engineer

Engaging the Structural Engineer

Select a PE with specific experience in the building type (wood-frame, concrete, steel, masonry), age range, and geographical area of the subject property. Provide the engineer with: the general inspection report highlighting structural concerns, the property age and construction type, any available original construction drawings or permits, and your specific questions (Is the foundation stable? Can the building support an additional floor? Can this wall be removed?). Request a proposal that includes: scope of assessment, site visit duration, deliverables (report format and content), timeline, and cost. Typical cost: $2,000-$7,500 for a standard assessment, $5,000-$15,000 for assessments requiring testing (concrete cores, load analysis).

The Structural Assessment Process

The Structural Assessment Process

The engineer's site visit typically takes 3-6 hours for a multifamily building. Activities include: visual examination of all exposed structural elements, floor level surveys at a grid of measurement points, crack documentation (location, length, width, pattern), plumb measurements of exterior walls, assessment of modifications or alterations to structural elements, and identification of any code deficiencies relative to current standards. The engineer may request destructive investigation (opening walls to examine framing) if conditions warrant. Some findings require monitoring over time—the engineer may install crack monitors and return in 4-6 weeks to assess movement. The report provides: a summary of conditions observed, a professional opinion on structural adequacy, recommended repairs (if needed) with estimated costs, and an opinion on whether the building is safe for continued occupancy.

Incorporating Structural Findings into Decisions

Incorporating Structural Findings into Decisions

Structural engineering findings fall into four categories for investment decision-making. Category 1 - No Concerns: the building is structurally sound with no significant deficiencies. Proceed with acquisition. Category 2 - Monitoring Recommended: minor conditions observed that should be monitored but do not require immediate action (hairline cracks, minor settlement within tolerance). Proceed with monitoring plan. Category 3 - Repair Required: significant conditions that require engineering remediation within a defined timeline. Quantify repair costs, negotiate credits, and proceed if returns still meet criteria. Category 4 - Significant Structural Deficiency: conditions that threaten building integrity, require major intervention, or create uncertainty too large to quantify. Strongly consider termination. The structural engineer's professional opinion carries significant weight in lender and insurance decisions—a negative structural report can derail financing even if you are willing to proceed.

Schedule & Milestones

W1

Day 15: Engineer conducts 4-hour site visit. Installs 6 crack monitors at key locations. Documents floor level variations with laser survey.

W2

Day 16: Floor level survey confirms differential settlement: the south end of the building has settled 2.3 inches relative to the north end.

W3

Day 22: Engineer returns to read crack monitors. Three monitors show no movement (static, historical settlement). Three monitors show 0.02-inch movement over 7 days (active, ongoing settlement).

W4

Day 25: Engineer delivers report. Opinion: active differential settlement due to inadequate footings on expansive clay soil. Recommended repair: 12 helical piers on the south foundation wall ($30,000) plus underpinning of 4 interior footings ($20,000). Total structural repair: $50,000.

W5

Day 26: The repair estimate is quantifiable and the engineer confirms the building is safe for continued occupancy during repairs. Add $50,000 to the CapEx budget.

W6

Day 28: Negotiate $40,000 seller credit for structural repairs (80% of estimate). Updated pro forma shows IRR of 15.8% vs. original 18.2%. Decision: Proceed—the structural issue is quantified, repairable, and priced into the acquisition.

Key Takeaways

  • Select a PE with specific experience in the subject property's construction type and age range.
  • Structural assessments include floor level surveys, crack documentation, plumb measurements, and modification review.
  • Four finding categories: no concerns, monitoring, repair required, and significant deficiency (potential deal-killer).
  • A negative structural report can derail financing and insurance even if the buyer is willing to accept the risk.

Common Mistakes to Avoid

Accepting a structural engineer's verbal opinion without a written report and cost estimate

Consequence: Verbal assessments cannot be used for price renegotiation, insurance negotiations, or lender discussions

Correction: Always obtain a written structural engineering report with specific findings, remediation recommendations, cost estimates, and timeline

Not sharing structural findings with the insurance broker and lender before closing

Consequence: Post-closing discovery by the insurer or lender can result in coverage exclusions, premium surcharges, or loan modification demands

Correction: Disclose structural findings to both insurance broker and lender during DD to understand coverage and financing implications before committing

Test Your Knowledge

1.When should a buyer engage a structural engineer during acquisition DD?

2.What does a structural engineering assessment typically include?

3.How should structural findings be incorporated into the acquisition decision?