How to Sell a Home With Building Code Violations
Do you suspect there may be some building code violations at your home? There are many tasks that need to get done before you sell your house, and making repairs is one of them.
Obvious repairs include checking your roof and fixing water leaks, but some other repairs might not be as apparent — like code violations.
Code violations often occur when homeowners do not take out the proper building permits when doing when making improvements or repairs to their property.
This is one category of fixes that might make your head spin, and it can be daunting to figure out which ones you need to make and which ones can be passed on to the next owner of your home.
The answers will depend on the value of your home and how much it might cost to remedy these code violations.
You’ll also want to have a clear picture of any fines that you might have to pay for not fixing violations and whether or not a buyer will want to take those on.
You definitely want to do your research about possible code violations in your home, before putting it on the market.
Here is an overview of your options for selling a house with code violations, with expert tips from realtors, to help relieve some of the stress involved in the process.
What Does it Mean if a House Isn’t up to Code?
Building code violations range from simple fixes to major repairs requiring a professional’s expertise. Building codes protect public health, general welfare, and safety with different rules by county, state, and even nationwide, such as with the National Electric Code (NEC), focused on safe electrical design, installation, and inspection of all types of electrical equipment.
This code is frequently updated and that means that even a functional electrical system may not be up to code if it hasn’t been updated during the last few years.
Code violations are not only a problem to address because they can make it more difficult to sell your home, they can also lead to fines.
For example, homeowners can accrue citations, violations, and fines for not cleaning their pool, forgetting to mow the lawn, and generally not maintaining their property following homeowners’ association requirements.
In fact, city fines for code violations can even accumulate by the day, meaning that the expense of fixing code violations could be less than the fines that result from a house that isn’t up to code.
Remedy The Code Violations Before You Sell
One obvious choice, if you have the financial resources, is to bring your house completely up to code before selling it.
A Realtor can advise you on whether this is the best way to go, making considerations for the market value of your home, the return on investment for making repairs, and the possible cost of fines for not being in compliance with code rules.
Some code violations are definitely worth addressing as they may be relatively easy to fix — like making sure ceiling-mounted smoke alarms are at least 4 inches away from walls and wall-mounted alarms are 4 inches to 12 inches down from the ceiling. However, others may be better left to the next owner, especially if they are going to mean a huge job in terms of time and money.
For example: If you have a piping issue and need to re-plumb your house, that may be a greater expense than you want to take on. A contractor can be a necessary asset to figure out the fixes that are a must.
Offer Buyers a Credit or a Lower Price to Account for Code Repairs
In the current housing market, sellers are finding buyers lining up for homes because there is not enough supply to keep up with demand. That means it could be easier now to sell a home with code violations.
You may find that buyers are willing to compromise and accept a credit or lower price which takes into consideration code violations. Not every house will fit this scenario, but if the violations are minor repairs, or are relatively easy to fix, you may be able to skip making them before selling.
If you do decide to let the buyer foot the bill for code violation fixes, there is more than one way to come to a compromise. Some sellers might offer buyers a credit at closing, considering the expense to make repairs on the home, as long as the code violations don’t pose a safety or health threat.
What’s key is to let buyers know upfront about all of the code violations that are present in your home, and then lowering the price accordingly — working with your agent and a contractor.
A similar solution is selling your house as-is at a lower price, with buyers knowing that they will need to make repairs. This can be done with a traditional sale, where the buyer finances the purchase with a mortgage, or to a cash buyer, which is a special type of buyer that may not be purchasing a house to live in.
Sell Your House as-is to a Cash Buyer
If you are trying to sell a house with code violations that affect your home’s livability or that would be cost-prohibitive to fix, you may be better off selling it “as-is” for cash.
Cash buyers are the most likely type of buyer to accept a house “as-is” with code violation fixes. One of the most common categories of cash buyers is iBuyers. iBuyers are institutional investors, national house flippers, or startup ups, which are in the business of purchasing homes directly.
While you are likely to get less for your home with this type of buyer than going the more traditional route of selling your house, if you have a lot of code violations and don’t want to deal with them before selling, this may be the way to go.
A real estate agent can help you figure out how much you might get for your home from a cash buyer vs. a traditional sale.
While a real estate agent is your best source, you can start by doing your research on HomeLight’s Simple Sale Platform, which partners with over 100 nationwide pre-approved iBuyers to connect sellers with cash buyers.
Selling a house as-is to a cash buyer is often faster than a traditional home sale, which is another advantage if you need to move quickly.
Code violations don’t have to mean a long process before you can sell your home. Depending on the violations you could opt for a quick fix, or pass the repairs on to a buyer.
There are so many variables to consider that it’s wise to research the fixes and the cost to remedy them before making any decisions about how to proceed. Selling a home in bad condition almost always means you’ll net less money so you have to decide if it’s worth it.
The right solution will depend on your specific situation and a real estate agent and contractor can advise you about different options from making the repairs, offering buyers a discount with some repairs still needed, or selling your house as-is.
With more than one option, the key is to consider your timeline and goals for your sale and then weigh how you can make your home sale fit in with them. Selling a house with code violations is definitely possible, with, or without, making all of the repairs ahead of time.