You want to sell your house but worry about obstacles that might keep you from handing over the keys. Let’s simplify one aspect of this daunting process by understanding the physical condition of your home or present code violations.
One common question is whether your house needs to be up to code in order to sell it. This is one factor that you don’t need to stress about. Your house does not legally need to be up to code to sell. Like most houses, it’s likely far from full compliance.
Codes vary by location, as they’re determined by your local government. Homes in violation are often grandfathered in from past standards, meaning they were up to code back when they were built but better codes exist now.
As long as the grandfathered codes aren’t actively creating problems — like causing a nuisance or danger to others — you shouldn’t run into problems with codes from insurance companies or home inspectors (they don’t enforce codes like city inspectors).
Keeping this in mind, you’ll want to understand how code violations can affect the home sales process, including:
- Knowing Buyers’ Perspectives Before Selling Your Home
- Learning About Codes to Prepare Your House for Sale
- Deciding if Home Renovations are Needed
Knowing Buyers’ Perspectives Before Selling Your Home
You’ll need to consider buyers’ preferences related to codes, especially with safety concerns.
Depending on the market and buyer, when selling you have these options
- Agree to make requested updates
- Provide funding for the buyer to make updates themselves
- Refuse to make updates, which could lead you to sell the home “as is” to a cash buyer
The way you approach each of these options can affect the price of your home.
You can prepare to sell your home by understanding what violations you have. Your local government’s building or inspection department can provide specific local codes. Generally, codes are established to ensure safety and efficiency in homes.
Finding the Right Type of Buyer
If the buyer is paying cash, code violations become a matter of the buyer’s preference. This isn’t a big concern if you sell the house as-is, although you still need to check local requirements for the transaction.
However, if the buyer needs a mortgage, the lender has more say in the condition of the house. This especially becomes an issue if the buyer needs financial assistance through an FHA Loan (Federal Housing Administration). Lenders for these loans have stricter requirements for the condition of the house so they have less risk in financing it.
The required appraisal in these cases is more thorough than other transactions. It takes into consideration certain safety standards, including whether the home has water damage, exterior holes, unfinished renovations and other safety concerns.
Learning About Codes to Prepare Your House for Sale
With homes grandfathered into outdated codes, you’re not required to make updates unless you alter the home in specific ways, which vary by location.
For example, in most cities, you don’t interfere with codes when replacing a toilet, as it involves connecting to existing plumbing without altering the built-in aspects. If you were to move the toilet to another wall, you get involved with basic piping behind the walls. It’s advised to follow codes for updating that appropriately.
This factors into renovation decisions before selling your house. Can the bathroom be sufficiently improved by replacing the toilet, instead of redesigning the bathroom to move the toilet to another wall, making room for the new whirlpool tub?
When taking on more extensive work, you might want to stick to the codes, otherwise, you’re at risk for fines from your local municipality and potentially a lawsuit by the buyer of your home, should your new work cause a problem. In this situation, a leak from plumbing that was incorrectly installed could cause more trouble than pulling permits and getting the city’s inspection upfront.
Despite these risks, people still complete new projects without permits and in violation of codes. This can cause a loss of value in the home, as the buyer might require funding to correct your work or you could be liable for issues that arise because of violations. Avoid this by keeping renovations to a minimum or checking with your local government before beginning in-depth work.
If code violations and permit fines are a concern, and you don’t have time or money to fix them, you can skip the work and sell your home as-is. This means you’ll likely need to drop the price and the buyer will take the risk on the home’s condition.
Deciding if Home Renovations are Needed
If you decide you can get more value from your home by renovating before selling it, consider what updates would be most valuable.
Focus on renovations that improve safety, functionality, and efficiency of your home. This includes a range of major to minor projects, from fixing the foundation to tightening handrails.
Beyond safety concerns, look into comparable homes nearby that sold recently to understand their appeal. The value of your upgrades differs based on your location and its market, so look for local examples to form your renovation strategy. These upgrades could include new exterior features, upgrading to more efficient appliances, building a new bathroom or finishing an existing basement. Upgrades might not require permits but major add-ons could involve meeting multiple new codes.
Now you’re empowered with knowledge of how the physical aspects of your home can affect its value when you sell it.
View the condition of your home through the lenses of potential buyers, local regulations and comparable homes sold in your area. Use these factors to decide whether it’s worth investing time and money to alter physical aspects that directly affect its sale. Then you can get the value you want from a satisfied buyer.
Recommended Reading
Buyers Ask provides more details on considering code violations
U.S. News gives further answers to code violations questions
National Center for Healthy Housing lists resources for finding code information