How to Sell a House With Structural Problems

Selling a house with structural problems can be a challenge. The problem affects your home value, limits your buyer pool, and makes lenders think twice about financing a sale. But you do have options. Before you even think about listing your home, you have to make a decision as to how you want to address the damage. 

How Does Foundation Damage Hurt the Sale of a House? 

Most buyers will be turned off by a crumbling or faulty foundation. As a result, you’re left with a smaller pool of buyers and less negotiating power. When selling your home, you’re required by law to disclose all damage and defects to potential buyers—including structural damage.

The structural damage will be addressed in the mandatory home inspection, and the value of your home will be negatively affected as a result. Even if the damage is overlooked during the inspection, you have to disclose it. Otherwise, you can be held liable for the cost of the repairs even after the home has sold. 

Even if the buyer still wants the house, the lender may deny financing. In the event of severe structural problems like a sagging roof or unstable foundation, the lender may request an engineer’s report. If the damage proves severe, the lender may deny the buyer’s loan request or demand immediate repairs as a condition for financing. 

How to Sell a House With Foundation Problems 

There are three ways to sell your house with structural problems: 

  • Complete the repairs before listing the property 
  • Negotiate the repair costs as part of the final sale
  • Sell the home as-is 

There are pros and cons to each approach. 

1. Make the Repairs Yourself 

Making the repairs yourself can be the most inconvenient option, but it’s also the most advantageous. 

The cost of repairing structural damage can vary tremendously depending on the source and extent of the problem. Most homeowners pay between $2,000 and $7,000 for structural repairs. You may be able to fix minor cracks for as little as $500. For an unstable foundation that requires the installation of hydraulic piers, the cost can easily travel north of $10,000. 

The first step is to obtain an estimate. If you can afford to complete the repairs before listing your home, this is usually the best way to go. You’ll ultimately be responsible for the cost anyway, and you can maximize your listing price and buyer pool if you address these issues up front. 

If you own at least 20% equity in your home, you may be able to apply for a home equity line of credit and use that money for your repairs. So if the home is worth $250,000 and you owe $150,000, you have $100,000 in equity (ownership) that you may be able to tap into.

If you can’t afford to make the repairs up front and you don’t have equity that you can access, determine if your state or municipality has a home repair grant program. In California, for example, low-income homeowners can apply for a Single Family Housing Repair Grant of up to $10,000. Loans are also available for up to $40,000. Visit HUD.gov to see home repair grant programs broken down by state and city. 

If you’re unable to handle the repairs on your own, your next option is to negotiate the value as part of the final sale price. 

2. Place the Repair Costs in an Escrow Account

Escrow allows you to pay for the repairs out of the home’s sale price, rather than paying out of pocket. 

If your house has $10,000 worth of structural damage, the simplest way to sell it is to disclose the damage to the buyer and agree to a sale price that’s at least $10,000 below market value—preferably more if you need to sweeten the deal a bit. This way, the buyer can use the savings to make the repairs. 

But this approach presents a couple of roadblocks: 

  1. Many buyers won’t want the hassle of repairing a fixer-upper 
  2. As previously noted, many lenders won’t approve a loan for a home with substantial damage

There is a workaround, though; you can establish a repair escrow. A repair escrow is a type of account in which you set aside the cost of the maintenance so that the house can be sold at its full appraised value. Basically, you come to an agreement with the buyer that a specific amount of money will be reserved for the repairs—which are usually handled after the sale but before the buyer moves in. 

If done correctly, it’s a win-win: you have a source of funds to fix the structure, the buyer doesn’t have to move into a damaged home, and the lender can process the loan with satisfactory terms. 

There are still downsides, of course. The faulty foundation can make a negative impression among buyers, and the price of the repairs comes out of your end. Still, if you can’t afford the repairs up front, it may be a good compromise. 

3. Sell the House As-Is 

Your final option is to simply sell the house as-is; you waive all responsibility for the repairs and market the home as a fixer-upper. The best way to go about selling a house with structural problems is to find a real estate investor. 

Unlike a traditional buyer, an investor buys homes for cash. You don’t have to worry about banks denying a loan due to disrepair. And unlike a traditional buyer, investors often prefer homes that are in less-than-perfect condition. It gives them the opportunity to upgrade the property and turn a profit on it. 

The transaction is simple: The investor appraises your home, makes you an offer, and writes you a check for the full agreed-upon amount. You don’t have to make the repairs or even clean the home before vacating. If you’re struggling to sell a house with structural problems, this option can be a lifeline. 

If you’d like to learn more, contact Get Fair Home Offers. We buy houses for cash in Los Angeles, and we’ll make an offer on any home regardless of the condition. We make competitive offers and can close in as little as 7 to 10 days. Call us today at (626) 817-3351 to receive your free, no-hassle offer.

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