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Three options to consider when selling a house with code violations
There are basically three ways you can deal with a code violation when you’re selling your home: fix it, offer money for someone else to fix it, or ignore it by selling your house as-is.
1. Fix the code violations
This option often depends on legal requirements, budgets, the scope of the problem, and the state of your local housing market. In a seller’s market, you will have more leverage regarding which, if any, violations you’re willing to correct.
Violations like these are often affordable and easy to fix:
The following violations can cost more to correct, but are generally still manageable:
- Upgrade your home’s electrical panel: $1,200-$2,000
- Restore a cracked foundation: $250–$800, may cost more if hydraulic piers, priced $1,000-$3,000 per pier, are required
- Re-plumb a house: $149-$5,800, depending on the piping material and size of the house
Some items are better replaced than repaired. For example, if polybutylene piping is under a concrete slab, it will inevitably become damaged over time, so you’re better off replacing the piping altogether.
2. Offer the buyer credit or lower the selling price
If the seller is unwilling or unable to bring a home up to code, offering a price reduction or a repair credit are options, particularly if the code violations don’t present a health or safety risk.
Since most buyers want a free and clear title, reducing the price can help attract someone willing to assume responsibility for addressing any violations. After all, the majority of buyers prefer to move into a home without needing to make repairs or deal with issues like plumbing or electrical problems.
Some examples of the most common credits sellers might offer include:
- Roof
- Electrical issues
- Water heater
- Plumbing repairs
- HVAC system issues
- Foundation or structural concerns
But take note that issuing repair credits can put the buyer’s mortgage at risk because the lender doesn’t know if the repair is warranted or will be performed by the buyer. Thus, a safer way to issue a credit is to simply reduce the home’s price.
Keep in mind that many loans only allow seller credits against closing costs, so technically, you cannot give a seller credit for repairs or things such as a carpet allowance, landscaping, or fencing. This could limit how much your “credit” can be.
For these reasons, working with a top agent who knows the market and has experience with code violation scenarios can be of immense value. A proven agent will know the ins and outs of mortgage loans, closing costs, and repair credits, and will be able to advise a seller on what repairs really should be taken care of and which ones can be skipped.
3. Sell your house as-is to a cash buyer
Your agent can advise if an as-is sale is right for you. It usually won’t get you top dollar, but it can be faster and save you the hassle of fixing anything else.
Selling your home as-is to an instant homebuyer or iBuyer before it hits the multiple listing service (MLS) may offer an attractive option if you don’t have the time or funds to bring it up to code. The pool of iBuyers includes institutional investors, national house flippers, and digital-age startups, all of whom purchase homes directly at scale.
If you’re considering an as-is sale but want to get an idea of how much a cash buyer might offer, you can consult HomeLight’s Simple Sale platform. Just answer a few questions about your home, its condition, and your selling timeline, and you can get an all-cash offer in 24 hours and sell your home in as little as 7 days, skipping the months it can take to sell the traditional way.
