What can you do to sell a house with code violations?
Buyers might find your home’s decorative crown molding and patterned wainscoting cute and fancy, but all the vintage charm in the world can’t save you from a code violation. Fortunately, hearing that your house isn’t up to code doesn’t necessarily mean you can't sell your house. When selling a house with code violations, you’ve got options to move the deal forward:
Fix the issue in a cost-effective and timely fashion.
Lower the asking price or provide a credit to the buyer.
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If you receive code violations about your property but you do not have the funds to repair the violations or pay fines and interest that accrue daily, you might be thinking, “I need to sell my house fast before anything else goes wrong.” A big concern for homeowners, when faced with violations, is that buyers will not consider a property that does not comply with local codes and will try to drive the price down.
If you are wondering if you can sell your home without revealing the violations to the buyer, the answer is “no.” The law requires you to reveal all building code violations. If you fail to do so, you may be responsible for any financial loss the buyer accrues due to the violations.
What does it mean if a house isn’t ‘up to code’?
Building codes protect public health, general welfare, and safety as far as construction and occupancy, but each municipality’s is different, and the rules can change frequently.
There also are nationwide codes, such as the National Electric Code (NEC), which details safe electrical design, installation, and inspection of all types of electrical equipment. As of 2017, the NEC has been revised 15 times, so what was safe in your home’s electrical system years ago—even if it’s still functional—might not be considered up to code today, especially with modern technology.
Homeowners also can rack up citations, violations, and fines for not cleaning their pool, forgetting to mow the lawn, and otherwise not maintaining the property in line with homeowners’ association requirements.
City fines for code violations are also no joke and can accrue on a daily basis.
Common code violations that crop up in a home sale
There are six common code violations that homeowners encounter. Some code violations are just a matter of cosmetics and you can comply with them for little cash output. Some of these violations include mowing the lawn, landscaping the property to improve the appearance, draining an unused pool, removing asbestos, or scraping and painting peeling paint. Repairing these types of violations could increase your home’s value and attract potential buyers.
Building code violations range from simple fixes to major repairs requiring a professional’s expertise. The Family Handyman, a home improvement publication founded in 1951, notes that the most common building code violations include:
smoke alarms that are placed incorrectly (not on each level of the house and not outside each bedroom)
handrails that don’t turn and end into a wall, preventing sleeves and straps from becoming snagged
missing or defective ground-fault circuit interrupter (GFCI) protection on kitchen, bathroom, garage, and outdoor circuits or outlets
bathroom exhaust fans that vent into an attic instead of outside
missing or improper deck flashing between a deck ledger board and the house, preventing wood rot and keeping the deck stable
Polybutylene piping was used as a substitute for copper piping from 1978 until 1995 and installed in an estimated 6 million to 10 million homes nationwide, according to Plumbing Express, a polybutylene remediator serving Virginia, North Carolina, Georgia, Maryland, Nevada, and Washington, D.C. Lawsuits and news reports have alleged defective installation or manufacturing of these pipes, causing cracks and leaks.
Other code violations can occur when a homeowner adds more living space or appliances such as a water heater without proper permits. Jim Davis, owner of About the House inspection Services in Houston, told U.S. News World Report that general inspectors like him don’t check for code compliance but will note issues such as poor workmanship, leaky plumbing, or any modification that “doesn’t meet current standards.”
These items don’t necessarily have to be fixed as long as you’ve kept up with proper home maintenance and the code violation doesn’t pose a health issue or cause disruption to the neighbors.
Homeowners insurance and buyer financing considerations
More pressing concerns may be whether buyers can obtain financing and insurance. Let’s say you decided you needed another bedroom, and you had a third car garage. You want to enclose one of those and make it a bedroom.
If you go to sell that property, most likely the lender, depending on the type of finance you’re using, will not give you a loan if you have violated the code, meaning it’s not permitted.
FHA loans, for instance, will not allow buyers to purchase properties with unpermitted converted garages or outdated electrical panels. “We would just have a seller cure that before we put it on the market,” she said.
Insurance for a home that’s not up to current codes also may be pricier. The Insurance Information Institute (III) says that homeowners insurance protects against “common perils” such as fire, theft, water damage, windstorms, and vandalism. But if your home isn’t up to current building codes when it’s damaged, you’ll likely have to repair or rebuild your home to the latest building codes—and pay the difference out of pocket.
An endorsement to your policy can pay a specified amount toward bringing your house up to code during a covered repair, but this is an additional cost.
Some older homes also may need a modified replacement cost policy, the III says. That means that instead of repairing or replacing features of older homes with like materials (such as plaster walls), the policy pays for repairs using current standard materials and techniques.
Do sellers need to disclose code violations to buyers?
Note that most states require sellers to make disclosures about any known defects of a house in writing.
But regardless of your state’s official requirements, it’s best to be upfront with potential buyers about any issues you’re aware of, whether you know a certain part of the house isn’t up to code or you’ve accrued fines from the city or a homeowners’ association. A title company will discover any liens or title defects—which must be resolved before closing—and a home inspector will note anything hazardous that’s not up to code.
Your options for selling a house with code violations: Fix it, lower the price, or sell “as is”
Option 1: Fix the issue to move forward with the sale.
If your home has any code violations, the best option may be to fix the issues before listing or closing, depending on when the problem crops up. Whether you decide to go this route will likely depend on the scope of the problem, as well as the current state of your local housing market.
It’s simple to move a ceiling-mounted smoke alarm at least 4 inches away from walls and wall-mounted alarms 4 inches to 12 inches down from the ceiling. It’s also inexpensive to test for GFCIs in your outlets by purchasing a GFCI receptacle tester (Home Depot sells some for about $15 to $26) and then replacing the outlets, which start at about $19 each.
Some electricians, for instance, charge $40 to $60 for replacing an old outlet with a GFCI one. Other upgrades such as installing a new electrical panel, effectively upgrading your home’s amp service, can run about $1,500 to $2,500.
As for polybutylene piping, for example, consider where it runs throughout your property and weigh the cost of replacement versus repairs for potential buyers. If the piping is under a concrete slab, it’s too costly to repair and is better off being replaced.
Prices vary depending on where you live, but re-plumbing a house can range from at least $1,500 to $15,000 depending on the piping material and size of the house.
The market also can influence how many renovations you need to make.
If a buyer has more properties to choose from, the competition is stacked against you. In this case, we would advise "Hey, we want to be the best house in the best condition for the best price. So let’s change the electrical panel. Let’s make sure the landscaping is perfect. Let’s make sure that the house shows like a model."
Option 2: Offer a credit or lower the price
If you’re not financially able to make such repairs, you can offer a credit at closing, or explain to your real estate agent your interest in selling the house “as is” at a lower price.
This may be a viable option if the code violations don’t present a safety or health threat to the buyer. However, you’ll need to be completely forthcoming with any issues and have the house inspected properly. To attract a buyer willing to assume the responsibility of those violations, you can count on having to reduce your price.
However, most buyers want to inherit a free and clear title and are not going to be interested in buying a house with code violations—that means finding this willing buyer could be next to impossible.
However, there is another option: to sell your house for cash to a direct buyer.
Option 3: Sell your house ‘as is’ to a cash buyer.
Most homeowners’ top priority when selling the house is to command the highest possible price point, and this is often best achieved by listing it on the open market with the assistance of a real estate agent.
But not every seller has the cash reserves or flexible timeline to remedy expensive code violations that stand in the way of securing a buyer the conventional way.
That’s when selling the house “as is” before it even hits the market to a cash buyer like Easy Outs Homes—becomes an attractive option, even if it means taking a price cut. There may be several cash buyers in your market alone that would throw their hat in the ring to purchase your home with favorable terms.
Curious how much a cash buyer would offer on your house? Simply request an offer through our form.
Just fill out some information about your home and location and we’ll present you with the best price available.
The bottom line on selling a house with code violations
As long as you have a clean title with no liens or other violations because you haven’t maintained your home to certain community guidelines, anything else is fixable, provided the market and buyers are flexible.
If you’re up against violations that affect a home’s livability or would cost tens of thousands of dollars to fix, then you may be better off finding out what a cash buyer would offer you to save the upfront money and hassles that major repairs require.
Sell Your House As-Is to an Investor
In many cases, buyers would rather not invest money to repair a house with multiple code violations. If all else fails, you can contact a real estate investor who will buy your house as-is, which saves you all the money needed to bring your house up to code. In fact, you can forgo selling your house through a realtor and find an investor who will pay cash for your house, ending the code violation nightmare. According to the National Association of Realtors, cash sales made up 23 percent of home sales in January 2017, increasing from 21 percent in December. Of these sales, investors bought 15 percent of the properties and fifty-nine percent of the investors paid cash. So, this option could be your best bet if you need cash fast.
When making your decision to sell your home for cash, consider these other benefits. With a cash sale to professional homebuyers and investors, you do not pay realtor commissions, inspection fees or closing costs. This gives you cash-in-hand to help relieve your financial burdens or use the cash for relocating.
If your house is located in Harford County, Maryland and surrounding areas and you need help selling your property, we can help with your situation, no matter what the condition of your home or code violations incurred. Contact us to find out what you can do about selling your house fast.