Selling a house with code violations can be challenging. Luckily, you still having options to sell, such as selling to an all cash buyer. Here at House Buyer Network, we can discuss all your selling options with you. Fill out our form to get started.
Selling a House With Code Violations
A house with code violations often causes panic and distress to its owner, especially if the house is set to be sold on the real estate market. This is understandable since many retail buyers back out of a home sale when violations are found during an inspection. But not all hope is lost.
Selling a house with code violations may be extra challenging, but it is possible. A homeowner has three options when dealing with violations during a home sale— fix the violation, set a lower asking price, or sell the house as-is to a cash buyer. Among these three, selling to a cash buyer allows you to not have to bring the property up to code.
This blog covers everything you need to know about selling a house with code violations! If you want to sell fast, keep on reading until the end.
What Are House Code Violations?
House code violations are committed against the building codes set by a city or municipality. These codes were adapted from the International Residential Code (IRC), which was created by the International Code Council (ICC).
Aside from the IRC, there are specific building codes a municipality can adapt based on the community's perceived needs. These are mainly added for the public's health and safety. For instance, a house should also be code compliant with the National Electric Code (NEC) or the codes set by the Homeowners Association (HOA).
Note that house or building codes can change over time. It is imperative that you are aware of any amendments to avoid surprises during a home inspection.
Common Code Violations
Many building code infractions are fixable. However, some need total repair or overhauls for the general welfare of the homeowner. Here are some of the most common building code violations home inspectors discover and should be addressed immediately.
- Basement bedroom without windows
- Presence of harmful materials (Example: removing asbestos)
- Bathroom exhaust fans venting to the home's attic
- Misplaced smoke alarm
- Structures without proper permits
- Electrical issues such as botched electrical wiring or an overloaded electrical panel
- Defective or missing GFCIs
- Missing deck flashing
- Missing guardrails or handrails
- Missing ventilation
- Incorrect fence height
- Low ceilings in stairwells
- Balusters that are spaced out too wide
- Structural damage
- Water heater with no expansion tank
- Plumbing issues
- Zoning issues
- Failure to drain an unused pool
- Fire hazards
Can You Sell a House With Code Violations?
Yes, you can sell a house with code violations. However, it won't be as easy as a typical home sale because the violations pose a big concern to the homeowner.
If you plan to sell your house on the local market with the help of a real estate agent, you probably have to bring the property up to code. This is because mortgage lenders do not finance houses with significant code violations.
It may also be difficult to ask the buyer to help you resolve the issues. Bringing a house up to code can cost a lot of money, and requesting a portion of the expenses from the buyer can cause them to back out of the sale.
To sell your house fast, even if it has code violations, depending solely on real estate agents can be risky. Explore all options by getting a free cash offer to sell your house as-is.
Do Home Sellers Need to Disclose Code Violations to Potential Buyers?
Whether or not a seller is required to disclose code violations to potential buyers depends on the rules of the state. Most states ask the sellers to fill out a disclosure document for the buyer's protection.
Even if the state doesn't require code violation disclosure, sellers must consider being upfront about what's wrong with the property to avoid a lawsuit later on.
Can Code Violations Reduce the Buyer Pool of a House?
Yes, code violations can significantly reduce the buyer pool of a house. Most buyers tend to walk out of a sale if the property has many code violations because they don't want to deal with major repairs and shoulder the cost.
They also find it hard to find a lender who would grant their loan application. Even if the buyer wants to continue with the sale, without the lender's approval, the sale won't be able to proceed.
Aside from mortgage restrictions and repair avoidance, two other reasons why the buyer pool of a house is reduced due to code violations are the possibility of dealing with an encumbered title and fines or liens.
Do You Need to Bring Anything Up to Code Before Selling Your House?
Bringing your house up to code is not always required depending on the state. Building codes change all the time and minor violations are typically forgiven. However, if the code violation concerns health and safety, it should be resolved unless you want to pay fines and face possible lawsuits.
It is recommended to talk to the concerned department of your local government as to what codes should be prioritized. While you're at it, contact your buyer's mortgage lender to inquire what specific codes they require to resolve. Mostly, this will include outdated electrical panels and converted garages that weren't permitted.
Options When Selling a House With Code Violations
Many homeowners aren't aware that their home violates a certain code until a home inspection is done. If the home inspector provided you with a long list of violations, that doesn't mean you can't sell your property. In fact, you have three options.
Fix the Code Violation
Selling on the traditional real estate market with the help of a real estate agent would require you to fix code violations.
Many retail buyers don't buy houses that aren't up to code. Moreover, their mortgage lenders won't approve their loan unless the issues of the property are resolved.
Note that fixing some code violations can be expensive, so this route is only ideal for people who have the money to spare and those whose violations are minor, like installing smoke alarms.
After making fixes, the city inspector or violation code officer from the city hall should approve the repairs in order for the sale to proceed. If they still don't approve, they can give you expert advice on how to best deal with the violations.
Lower Your Asking Price
Another option to sell a house that is not up to code is to lower your asking price. This is for home sellers who want to sell the house left unchanged.
Lowering the selling price would give the buyer enough funds to cover the house issues that are worth repairing. If they really want the property, they would put in an offer even though they would be in charge of bringing the house up to code.
The only challenge selling as-is and lowering the asking price on the open market is that the buyer would still find it hard to get lender approval.
Sell Your House to a Cash Buyer
Your last option is to sell your home as-is to a cash buyer or real estate investor.
You won't have to make any repairs to bring your house up to code. You'll save yourself from the stress of finding contractors and putting out too much money if you're already in a sticky financial situation.
Cash buyers or real estate investors can pay cash fast. They don't need a mortgage loan, so lenders are eliminated from the picture. This also solves the problem of lenders not approving a mortgage loan due to code violations.
Verify whether the cash buying company you receive an offer from pays for closing costs and allows the sale timeline to be flexible. Cash home buyers are known for buying houses fast, and allowing the seller to adjust the selling timeline to your schedule.
Frequently Asked Questions
How Long Are Violations on Building Codes Valid?
Until a code violation gets fixed, it remains valid-- unless there's an amendment in the building code that makes the violation obsolete. This rarely happens, though. Getting your house up to code if you wish to sell your house on the traditional market with the help of a real estate agent will give you the widest buyer pool.
Can I Skip Repairing Smaller Violations?
Yes. In most cases, you don't need to fix smaller violations, for example, chipped tile flooring, peeling paint, and other cosmetic issues. However, if you want to impress a retail buyer, you could make even the smallest fixes as it sends a message that the property is really valuable.
If you are selling your house as-is to a cash buyer or real estate investor, repairing small violations isn't necessary.
Should Grandfathered Code Violations be Disclosed?
Generally, grandfathered code violations don't have to be disclosed to the buyer of a property. When a house was legally built before the implementation of certain local codes, the owner isn't required to comply with it unless the new code pertains to health and safety.
It only makes sense to disclose a grandfathered code violation if it puts the buyers in danger.
Do Lenders Approve a Mortgage on a House With Code Violations?
In most cases, mortgage lenders do not approve a loan if the house has code violations, whether it be an electrical or plumbing issue or much smaller violations.
In fact, many of these mortgage providers issue a list of current code violations that should be addressed for them to approve the financing of a home. This is for their protection and for the buyer as well.
Final Thoughts: Selling a House With Code Violations
Resolving code violations when selling your home on the open market can drain you physically and financially. However, you don't really have an option if you want to sell to a retail buyer.
In case you don't have enough funds to resolve the violations or you want to sell your home as-is, a more convenient alternative would be to sell to a cash buyer.
Here at House Buyer Network, we can pay cash for your house that isn't up to code. We make the repairs and fixes so you don't have to, and we cover the closing costs!
Fill out our form below or call us at (855) 835-2544 to start selling your home for top dollar.
