What Are Your Options for Selling a House With Code Violations?

by APSense News Release Admin

What to Know About Selling a Home With Code Violations

When a potential buyer is shopping for a new home, how that home looks can mean the difference between them stopping to take a closer look or moving on. But how a home looks are only one factor to consider, and there could be unseen issues that can send buyers moving on to the next home.

That’s why it’s key to assess repairs that need to happen before you put your home on the market. Some fixes might be obvious — like checking the state of your roof and repairing cracked pavement around your house.

Others, however, might be less clear-cut, like making sure your house is up to code. But hearing that your home has code violations doesn’t mean you have to put the breaks on moving forward with its sale. Depending on the issues it may or may not impact the closing process on the house.

Unlike other repairs that are a must before selling, some code violations might not need to be addressed before you sell, and you do have options to sell a house with code violations. Here are some insights from Realtors about what these code violations are and how you can move forward with your home sale despite them.

What does it mean if a house isn’t up to code?

Building codes are in place to keep communities safe. Codes vary by state and county, with some codes even applying nationwide. However, what’s tricky about codes is staying on top of updates. For example, the National Electric Code (NEC), which is focused on safe electrical design, installation, and inspection, is updated every few years.

That means that even a functional electrical system may not be up to code if installed several years ago. 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 you or your home’s next owner.

What are the most common code violations?

Some code violations are more serious than others. The age of your home can contribute to code violations, especially with electrical panels that aren’t powerful enough for current standards and polybutylene piping that can pose a hazard to humans.

Polybutylene piping was used as a substitute for copper piping from 1978 until 1995. It was 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 talk about defective installation or manufacturing of these pipes, which cause cracks, leaks, and dangerous mold.

Other common code violations are home additions like in-law units or garages or appliances such as water heaters added without permits. If the code violation doesn’t pose a health risk and you have kept up with general home maintenance, it’s possible that you can sell your home without bringing it completely up to code. Otherwise, you may need to make repairs before you sell.

Which code violations need to be fixed before you sell?

A realtor can advise you about which code violations you have to fix before you sell your home. And if you want to sell your home following the traditional route of working with a buyer who will live in your home and finance the sale with a mortgage, there may be some violations that are a must to fix.

Some of them could be easy, 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. Beyond just the hazard of living in a home with violations, it’s worth considering that some code violations may make homeowners’ insurance more expensive and lead to more expensive home repairs in case of a catastrophe.

For example, if a home isn’t up to current building codes when it’s damaged, it may need to be rebuilt to the latest building codes, with the owner paying the difference out of pocket. That means bringing add-ons or electrical paneling up to code, or better yet, addressing these issues while making updates, can be better for you and the future owner of your home.

Ways to sell your house with code violations

There’s more than one option for selling a home with code violations, and the best solution will depend on the severity of the violations involved. But market conditions make now an ideal time to sell a home with potential issues.

Across the United States, real estate is facing a sellers’ market, where there are more buyers than houses on the market, and it may be easier to sell a house with code violations because there is not enough supply to keep up with demand. Buyers are more willing to compromise and accept a home that may need some repairs before they move in.

Offer buyers a discount

Even in a sellers’ market, code violations can’t be ignored completely, and one approach is to offer buyers a credit or a lower price to account for code repairs. A realtor can advise you about the best way to approach this type of credit. Some sellers might offer buyers a credit at closing, considering the expense to make repairs on the home.

What’s key is letting buyers know upfront about all of the code violations present in your home and then lowering the price accordingly — working with your agent and a contractor. Another way to go is selling your house as-is at a lower price, with buyers knowing that they may need to make repairs, depending on the severity of the code violations.

Different types of buyers may be willing to follow through with the sale of a home with major code violations. The most likely is a cash buyer, a special type of buyer who may not be purchasing a house to live in.

Sell “as is” for cash

A house with major code violations may be best sold “as is” for cash, especially if you find that the fixes are cost-prohibitive or you need to sell your home quickly. iBuyers are one type of cash buyer that is worth considering.

You can start your research about these buyers using 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.

iBuyers could be institutional investors, national house flippers, or startups that purchase homes directly. Selling a home for cash will likely not bring you as much as going the more traditional route of selling your house with a mortgage buyer, but if you have a lot of code violations and don’t have the time or resources to deal with them, this may be the best route.

A real estate agent can advise you about the price difference between selling your home to a cash buyer or going with a traditional sale.

Finding out that your home has code violations doesn’t have to mean a long process of making repairs before you can sell it. Consulting a Realtor can help you find the best strategy for the sale of your home.