During my career, I became a licensed CEU provider for the Arizona real estate community. I provide a three-hour renewal class on disclosure requirements for real estate agents. What struck me is the amount of regulations and oversight that are present in the real estate community. Even my instructor license requires renewal education. There are forms, inspections, regulations, commissioner’s rules, and many other requirements. By contrast, it is striking how little regulation and oversight exist for foundation repair salespeople and the foundation repair industry as a whole.

Sales Supervisors Only Hold Salespeople Accountable… to Sell Enough

Theoretically, sales managers and general managers of foundation repair companies should hold salespeople accountable for their actions. What this really means, in all practicality, is that they hold them accountable for selling enough. I have never heard of managers holding anyone accountable for having overly aggressive repair plans. Everyone wants to have the superstar on their team who will sell 3–4 million a year (and earn 3–4 hundred thousand). I have even heard of a “super superstar” selling 9 million. Once they find them, they pretty much let them run the show, in fear of killing the goose that lays golden eggs.

Speaking of fear, these managers also fear their best golden goose being recruited by the competition. Why would they leave? Promises that they can pretty much do anything they want. Trust me, it happens constantly, with the bigger companies stealing from the smaller ones by promising cushier perks and autonomy… and lots of leads. I once lost a “high seller” who was basically butt-hurt for being caught cheating, trying to sneak a change to a repair plan built by a licensed engineer. A plan that had a zero chance of performing properly.

How Sales Incentives Drive Larger Repair Plans

It is quite common for managers to punish “low performers” by restricting their leads and giving more leads to their superstars. The low performers are given remedial time in the office to practice their craft with other low performers, rather than going out on leads. They are given a performance improvement plan that basically requires them to sell more… or face firing, which happens quickly if the “performance” does not improve.

What is the easiest way to sell more? To sell larger jobs. Foundation repair companies like larger jobs; they are easier to make a profit on. So salespeople are “encouraged” to sell bigger jobs. They even measure this with a statistic called ADL, average dollars per lead.

Verbal Sales Practices Leave Homeowners Unprotected

Now, how do you sell more per lead? Put piers everywhere you can think of, sell add-on services, and do anything else you can think of, regardless of whether it really needs it. If your only tool is a hammer, all problems start to look like nails.

These visits to homeowners last between 3–4 hours. They have a PowerPoint-style presentation on a computer, with nice graphics and videos. During this time, they “educate” the homeowner about soils, foundations, and repair methods. Almost all of this is verbal, with little to no documentation to back up their comments. Foundation repair companies prefer this because it leaves homeowners with no recourse against claims made by foundation repair salespeople. They could claim the moon is made of green cheese, and there would be nothing to hold the salesperson accountable.

State Contractor Boards

So we realize that the company is basically run by the successful salesperson himself, and no one internally is holding him accountable. Can’t state contractor boards hold the company itself accountable for crazy repair plans that don’t work? Nope. State contractor boards enforce only minimum workmanship standards, which do not include design. They basically only want to know that the work was done in a workmanlike way

The problem is, they have no clue what good foundation repair workmanship looks like. The work is buried underground, and there are no requirements for the contractor to keep records that could demonstrate proper installation. See my previous blog.

Basically, the piers could be on the wrong side of the house, too many or too few, or not needed at all. Unfortunately, the state contractor boards have no mandate to police this.

Engineering Boards

What about state professional boards? In Arizona, it’s called the Board of Technical Registration (BTR). In North Carolina, it’s called the North Carolina Board of Engineers and Land Surveyors (NCBELS). These guys are supposed to regulate professional designers. The problem is that they have no jurisdiction over contractors, and there is a residential exclusion. So, with the same design problems as noted above, the state professional design boards can do nothing to enforce proper designs by out-of-control foundation repair salespeople. 

City and County Inspectors

One of the biggest lies told to homeowners is to “not worry… when we pull permits, the engineer sealing the repair plan will look everything over to make sure everything is ‘OK.’” 

But this literally cannot happen. If an engineer opines or makes recommendations on a project that he or she did not gather the data on, they are in danger of losing their license for “rubber stamping.”

The only requirement for permits is a spacing plan. There is no oversight of the original conditions or of the proposed solutions to improve (or not) those conditions. Yavapai County (Arizona) was the only local jurisdiction that required an initial assessment by a licensed engineer and solutions proposed by the same engineer. We hope to change this soon, with others following their example.

Legal Remedies

Finally, if the repair’s performance is less than desirable, you can look to the company itself to honor its “lifetime warranty” and remedy any performance issues. Unfortunately, this is rather vacuous. The warranty does not cover design problems and, in effect, includes a number of get-out-of-jail-free cards for the contractor.

I reviewed the worthless “lifetime warranties” offered by foundation repair contractors in a previous blog.

Even if you have a slam dunk case against a foundation repair contractor, it is a very difficult case to win… for several reasons. First, the contractor is in the business. They know the right attorneys and the right expert witnesses to help them, the best in the field. Second, as discussed, there are no independent special inspectors who keep independent records to corroborate proper installations. Third, as noted above, the contracts are written to favor the contractor, limiting what can be claimed by the homeowner. Some contracts even mandate arbitration that favors the contractor. Fourth, the contractor has a much larger war chest than the average homeowner. Their war chests are about to get much larger. There is a consolidation occurring in the industry. Private equity and wealthy families are buying up small mom-and-pop shops in record numbers. Fighting someone backed by Wall Street is a losing strategy for the average homeowner.

The Result: Little to No Accountability

In the end, there is almost no accountability for the designs and other products or opinions of commissioned foundation repair salesmen. And since almost all of their work is done verbally and not in writing, the statements they make cannot be fact-checked nor held accountable for inaccuracies or outright misdirection.

A Better Alternative: Independent Forensic Engineering

A better plan is to hire a licensed forensic geotechnical engineer for an unbiased, fact-based assessment of foundation performance. By hiring a forensic geotech, there is governmental oversight, an oath of ethics, E&O insurance, and written work product and opinions.