Can You Still Sell Your House if It’s Condemned?
Even though the information on this web page is provided by a qualified industry expert, it should not be considered as legal, tax, financial or investment advice. Since every individual’s situation is unique, a qualified professional should be consulted before making financial decisions.
In the following article, we are going to examine the ways in which you can sell your condemned house. I assure you that it’s possible. I’ve seen this happening many times during my two-decade long residential real estate investing career.
By the end of this article, not only will you be confident that you know how to sell a condemned house, but you will also be ready to make your first step.
Let’s look at the ways in which a condemned house can be sold.
Can You Sell a Condemned House?
2 Options You Have for Selling a Condemned Property
There are basically two ways in which you can sell a property that has been condemned.
The first way is to make all the repairs that are needed to put the property in an acceptable condition. Then, you will need to have it inspected by the proper authorities and declared habitable. Once that is done you can market the property for sale to the general public. You may have already considered this method.
What you may not know is that condemned properties can be sold as-is without you having to make any repairs. This would obviously be an easier way to sell your home. It will mean less time and less out of pocket expense for you.
We’ll carefully go over both ways to sell your home so that you’ll be able to decide which method works best for your individual situation.
Why Selling a Condemned House Is Difficult
Can you sell a condemned house in your area? It may depend on the laws where you are located.
Housing code laws and regulations are written and enforced at the local level. There is a lot that you need to learn about the condemnation process where your property is located.
In your area, the sale of a condemned property may not even be allowed before repairs have been made and the property re-inspected.
By the time a property has been condemned, you probably have a limited amount of time to make arrangements to sell before losing control of your property.
The typical home buyer is not prepared to deal with the difficulty of buying a condemned property. Real estate brokers will not waste their time listing a property, or showing one to their clients unless it has a Certificate of Occupancy and ownership can be legally transferred.
Most homebuyers have to borrow money to buy a house. Mortgage lenders will not even look at a loan to buy a condemned property because:
- The property can be taken by the government.
- A condemned property cannot be occupied.
- They will not lend on the possible future value of their collateral after it’s been repaired.
What Are the Grounds for House Condemnation?
The reason why your property was condemned will have a large impact on your options. It’s important to understand what causes a house to be condemned.
A house can be condemned because of gradual deterioration over time, or because work was done on the house that was not permitted or does not meet building codes.
Some of the issues that could violate local building codes include;
- Structural damage or deterioration
- Improper ventilation
- Lack of proper sanitation systems
- Lack of heat and/or air conditioning
- Improper and/or dangerous electrical systems
- Unhealthy conditions such as pest infestation or mold
- No utilities (electricity, water, etc.)
Depending on the size of the problem, some of these items can be fixed fairly easily and the house reinspected.
If the problems are structural or widespread throughout the house, the cost and time involved may make that option unworkable for you.
If you have made renovations by yourself or hired an unlicensed contractor, and did not get the proper permits, your house will not pass inspection. This may require you to have all your work completely re-done. If the situation isn’t corrected your house could eventually wind up being condemned.
Remember, if significant work was done to the property, the local authorities may inspect the entire premises. If this happens, other areas of your home may have to be brought up to current codes as well.
If you own a property that has been vacant and in disrepair for a long time, the local government can declare it to be dilapidated and condemn it without listing specific reasons.
What Happens when a House Is Declared Condemned?
Rules may vary in different locations, but there is always a prescribed process for condemning someone’s property.
When the local authorities become aware that a residential property is in violation of their building codes, they will notify the owner of the violation.
Once the owner is notified, they are given a specified amount of time to fix the problem. If that doesn’t happen, then the process goes to the next stage and the owner is notified. Sometimes the owner can either appeal the violation or ask for more time to fix the problem.
After that, if the problem is still not taken care of, the property can be condemned. Often, the owner again has the right to appeal. If good reasons cannot be found to stop the condemnation, the property will be condemned.
Once a property is condemned, it becomes illegal to stay there. The owners, or their tenants, will have to vacate the premises.
The municipality will usually have the option of making the repairs themselves or having the house demolished. Either way, their costs will become a lien on the property and the owner will be responsible for paying them.
Option 1: Sell the Condemned House As Is
By the time a property has been condemned, the owner has been given a lot of time to either make repairs or to get an extension. If the property hasn’t been fixed by then, it’s probably not going to happen.
At this point, there is not much time left in the process. In order to get value out of your property, you will need to move quickly. You will need to sell the house in poor condition as is.
The Buyer to Go to when Selling a Condemned House
Can a condemned house be sold under these conditions? Yes, it can. It happens all the time. Finding the right buyer makes it all possible.
As we’ve mentioned, someone needing to borrow money isn’t a potential buyer for your condemned property as-is. You need someone who has cash and is ready to move fast.
For a buyer to move quickly they need to be knowledgeable in the area of buying condemned properties.
Real estate investors are qualified to buy condemned houses. They are professionals who can assess the situation quickly and move without delay to buy your house.
Investors pay all cash for condemned houses so they, and you don’t have to worry about lenders’ concerns.
An investor’s experience with building codes and the condemnation process in your area is as important as their being able to pay cash.
Real estate investors know how to navigate the legal path to achieve a sale of the property. The local authorities will have to be convinced that the new owner has the ability and experience to put the property in a habitable condition. An experienced investor gives them the assurance they need so that they will allow the sale of the property.
Investors target properties like yours that need repairs. They are able to fix a lot of things for themselves. For repairs that require licensed contractors, they have crews that they regularly employ. Being a continuing source of work for these contractors gives them rates below what the general public would be charged. This is how they make their profit.
Some investors will fix the house and sell it as soon as it’s ready. You may have heard these people referred to as “house flippers”. Other investors will keep the property and rent it. They may decide to sell the property later when market conditions are favorable.
What Can I Get Out of Selling a House As Is to an Investor?
Selling a house that has been condemned as-is to a real estate investor has a number of benefits:
- When choosing to deal with a professional investor, you sell your house fast and for cash. It would be virtually impossible to sell a condemned house to someone who has to borrow money for the purchase. A cash sale is a critical factor in selling your condemned house.
- Real estate investors will buy your house as-is. If your house has been condemned, you probably don’t have enough time left or the cash to make the needed repairs. When you sell to an investor, those worries are taken off your shoulders.
- An investor can move quickly to close on the sale of your house. Condemnation is usually the last phase in the code enforcement process. You may not have much time left to close the deal.
- You will save on closing expenses. Third parties, such as brokers, aren’t needed. Not having brokers’ commissions alone will save you thousands of dollars.
- Fewer moving parts in the transaction. You deal directly with the buyer. You avoid the inconveniences of traditional home marketing methods such as showings and open houses.
The state of your property and the market conditions in your area will impact the offer that an investor can make. They will have to account for the costs of repair and their budgeted profit margin. You may not receive full market value for your home.
However, as we mentioned, you also won’t have a lot of the traditional costs of selling your house either. A careful comparison of the values and costs may show you that selling to an investor has unique advantages for the seller of a condemned house.
You can learn more about how much an investor will normally pay for your house (and how much you will not spend on closing costs) in our guide Selling Your Home to a Real Estate Investor the Right Way.
How to Get the Top Dollar when Selling for Cash As Is
Finding the right investor is absolutely key to getting the best offer for your home. Selling a condemned house isn’t something that most people do on a regular basis. When it comes to locating reputable investors and getting the best offers, you’re starting from scratch.
You can spend a lot of time learning about investors and how to find them. That is if you have a lot of time.
The Internet is the go-to place for information and you’ll certainly start there. You should be able to find the names of some investors. If you can, try to research their track record. Be careful of reviews. Some of them are paid for.
Or, you can go straight to our platform — HouseCashin. HouseCashin is the best place to find the right real estate investor for your circumstances and your location.
HouseCashin has already researched and found reputable real estate investors throughout the USA. We have thoroughly investigated the best investors in your area for experience and reliability. Our online platform puts these qualified investors together with sellers like you.
By using our online cash offer request form, you can quickly and easily put your property in front of the right buyers. Get up to five no-obligation cash offers for your home, compare them, and choose the best one. And, you’ll have confidence that the investor you choose will be the right one for you to have a stress-free transaction.
Option 2: Fix the Condemned House and then Sell
Rather than looking for local real estate investors to sell your condemned house to, you may want to look into repairing or rebuilding the property and then selling it for a higher price. Let’s discuss how to do it.
Can a Condemned House Be Fixed?
Can you fix a condemned house? Maybe you can — it will depend on the level of repairs needed and the time and money that you have.
A house can be condemned for only one or two items if they haven’t been corrected. If the condition and the needed repairs are manageable, then you should be better off making repairs.
Are you allowed to fix the house once it’s condemned? You can probably work that out. The local authorities would prefer that the house be fixed and inhabited. This is good for the community and the local economy.
But, as we’ve said before, the reality is that by the time the process has gotten all the way to condemnation, you have already been given a lot of time to arrange to make repairs. If you’re making progress, then the local authority will probably give you more time. If you’re not getting anywhere, then they probably won’t.
If you haven’t done anything at all by the time your house is condemned, you probably don’t have the money to make the repairs and you no longer have the time.
This is why most people faced with this situation don’t or can’t repair a condemned property.
What Is Involved in Rehabilitating a Condemned House?
Repairing one system or area of your house can be as simple as hiring a contractor. Make sure that they pull the proper permits, and fix the problem. Then you will need to have the house re-inspected by the housing code authorities and a new Certificate of Occupancy issued for your house.
If fixing the violations will involve major renovations, you’ll need to do more. Depending on your local regulations, you will possibly need to have an architect draw plans to show the intended work.
If the renovations involve mechanical systems, such as electrical or HVAC, then mechanical plans will also have to be prepared.
Once all your plans have been approved, permits can be issued.
Next, you’ll need to interview several General Contractors to price the work. There may be home renovation General Contractors in your area that perform “design-build” projects. This is where everything is done in-house and could possibly save you money.
In addition to the ongoing inspections that have to be done during construction (insulation, drywall, electrical, etc.), a final inspection will be done. This ensures that the work done matches the approved plans.
Once the work is approved, a new Certificate of Occupancy can be issued, and the property can be sold as usual, with the help of one of your local real estate agents or through a FSBO sale. To learn more about these options, read our articles Cost of Selling a Home with a Realtor, FSBO Closing Costs and Fees when Selling a Home by Owner, and Closing Costs for Home Sellers (3 Options Compared).
Should I Sell a Condemned House As Is or Rehab It First?
Everyone’s situation is different. You need to look at the options we’ve discussed and see how they apply to your circumstances.
If you have the financial means to bring your property up to code, and the time in which to do it, then that could be your best course of action.
You should price the cost of repairs, determine the market value of your property once the work is done, and calculate whether or not you will recoup those costs.
In most cases, however, when a property has actually been condemned by local authorities, the sooner you can dispose of the problem the better.
If the market value of your home will not support the cost of repairs, or if you don’t have both the time and the money to make repairs, then a sale to a real estate investor might be your best option.
To maximize the value you get from the sale of your property to an investor, consider requesting a cash offer from HouseCashin. We are a national platform connecting homeowners looking to sell their house fast and for cash with real estate investors willing to help them.
Fill out our “Request a Cash Offer” form to get a few offers from competing real estate investors working in your area and vetted by our reputation standards. Then choose the best offer and quickly close on your home within a couple of weeks, skipping the inconveniences and upfront expenses of a traditional real estate sale.