It’s important to point out that a home inspector’s job is not to find and report code violations. “Our job is to find and report defects,” Barker says. While there may be some overlap, he emphasizes that the ASHI standard specifies that inspectors look for items that are: Significantly deficient Not functioning properly Unsafe At the end of their service life As you can see, code violations can come in many shapes and sizes, and addressing them on your own can be overwhelming. For guidance on how to deal with your specific code violations, consult a qualified real estate agent. Partnering with an experienced agent who is knowledgeable about the local codes and requirements can take a lot of pressure off a seller. Navigate Your Home Sale With a Top Agent Top agents have seen it all and can be invaluable resources when selling a house with code violations. We’ve introduced over 1 million buyers and sellers (and counting) to top local real estate agents who go above and beyond for their cleints. Does the homeowner need to fix code violations in order to sell? Whether or not you must fix a code violation in order to sell your home depends on where you live and what the problem is. Many issues do not have to be fixed to sell your home, but some state or local authorities may require certain safety issues to be corrected before transfer of property. Check with city hall, the building department, or your real estate agent to find out what must be addressed. In addition, the buyer’s lending company may dictate if code violations must be fixed before purchase. For example, FHA loans typically won’t allow buyers to purchase properties with unpermitted converted garages or outdated electrical panels. This could become a negotiating point with the buyer. Similarly, because homeowners insurance for a home that’s not up to code may cost more, that, too, may become a point of leverage that allows the buyer to negotiate a reduced sales price on your home. Do sellers need to disclose code violations to buyers? Most states require sellers to disclose any known defects of a house in writing. Some states have standard disclosure forms. Even if your state doesn’t require disclosure, it’s a good idea to inform potential buyers of any issues you know about; doing so could protect you from a lawsuit. A title company will discover any liens or title defects, which must be resolved before closing, and a home inspector will note anything that’s a defect. According to both Barker and Davis, the home inspection is when most code violations are discovered. Can code violations reduce your buyer pool? Because many buyers include a home inspection contingency, they can walk away from a sale after discovering major code violations. “Most buyers don’t want to deal with repairs,” Davis says. They may have to walk because code violations can make it difficult or impossible for them to obtain financing and insurance for the home. Some specific buyer roadblocks include: Encumbered title: If the home’s title is encumbered due to code violations, the seller can’t pass a clear title to a buyer until the violations are fixed. A buyer will likely not be able to get title insurance until code violations are resolved. Unpaid fines or liens: Some code violations incur fines or liens, putting a sale on hold until they are resolved. The most common are unpaid taxes or HOA dues. Mortgage restrictions: Many lenders won’t issue a mortgage for a property with code violations or liens. Even if the buyer can get insurance, it’s likely to cost them. The Insurance Information Institute (III) says that homeowners insurance protects against “common perils” such as fire, theft, water damage, windstorms, and vandalism. If your home isn’t up to code, it’s considered more susceptible to those perils, making insurance premiums higher. Not all buyers can afford or will agree to pay higher premiums. 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: These violations can cost more to correct but are generally still manageable: 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 a 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. Because most buyers want a free and clear title, it’s almost imperative to reduce the price in order to attract a buyer willing to assume the responsibility of addressing any violations. Although some buyers may prefer to complete repairs to their standards, the National Association of Realtors (NAR) found that in 2023, 45% of buyers who purchased new homes wanted to avoid renovations and problems with plumbing or electricity. Some examples of the most common credits sellers might offer include: Roof Electrical issues Water heater 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, so 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. Although this type of sale typically doesn’t command top dollar, it has other advantages, such as speed and the possibility that you may not need to disclose property defects. Selling your home as-is to an iBuyer (instant homebuyer) 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 10 days, skipping the months it can take to sell the traditional way.
