This picture is looking down on the top of the foundation with the wood being the sill plate that the home's framing sits on. If you look carefully, there is a bead of concrete that runs parallel to the sill plate, with about an inch separation. That bead use to be against the plate. What has happened is that the foundation has moved in. During this inspection the buyer had a foundation company come out during the inspection to look at the many cracks. The fellow played down the cracks as normal, ignoring the pattern of cracks as well as a horizontal crack (one that says "failure".) He did not notice the movement/separation at the sill plate and when it was brought to his attention he provided a lame excuse and told the client that simply patching the cracks would suffice. Generally foundation cracks are not a concern for failure. But this house was different and the contractor had either no clue what he was seeing or simply wanted to sell his service, which did not deal with foundation failure.

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