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What is a Condemned House? What Sellers Need to Know

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Do you own a home that has been recently condemned, and are you struggling to fix or get rid of it?

Home condemnation occurs more often than you think, and we’ve seen homes in near perfect condition condemned because of one or more housing code violations. Fortunately, you do have the option to either repair your home or sell it, although you may face legal challenges.  

Below, we’ll explain everything you need to know about selling a condemned home with or without repair.

What makes a house condemned? 

A house is considered condemned if the local government determines it unsuitable for occupancy. Occupants are forced to either move, rehab or relinquish their home to a third party once a home is condemned. The government may also intervene and exercise its right to seize a home and provide fair market compensation to the homeowners.  

Here are the reasons a house may be condemned:

  • Built with poor materials
  • Extensive termite damage causing structural damage
  • Hygiene problems exist, including mold
  • Utilities have been shut off (water, heat, electric, plumbing)
  • Weather or pest damage has caused the house to be unsafe or structurally deficient  
  • Vacant or boarded up – typically condemned by local government after two months
  • Inspector condemns after local officials deem it dilapidated, which means there are no particular hazards

Once a house is condemned, it’s the owner’s responsibility to either repair it, move out or sell. Since you are looking to sell a condemned house, remember: there’s a catch. Condemned homes can only be sold as land and not as an actual home on the market.

Can a condemned house be repaired?

Yes. While condemned homes are considered the last opportunity for occupancy, a homeowner can repair a condemned home and make it livable again. Owners should weigh whether or not the value of the repairs exceeds the value of the home before proceeding. Work with an experienced contractor and appraiser to determine the appropriate next steps.

How can I get the condemned status removed from my home?

To get a home “uncondemned”

  1. Consult your local building authority and negotiate a rehab or repair agreement.  
  2. Complete the repairs.
  3. Have the home inspected by the local government authority who will verify the repairs have been completed and the rehabbed home is code compliant and reverse the home’s status.

How much can I get for selling a condemned home?

Depending on the buyer, you can still receive fair compensation for a condemned home if it sits on a desirable lot or location or offers potential upside. Generally, a condemned property is considered less valuable than vacant land because it requires the additional burden of either repairing or demolishing the home. Before rehabbing a condemned home, it’s important to consider whether the price of repair will exceed the appraised value of the home at the time of condemned appraisal.

How can I receive compensation for a condemned home if I can’t sell it?

Through a pro-tanto award. If your house is considered condemned and you can’t sell it, then your local housing authority may decide to seize it. When this happens, the government will provide a pro-tanto award, where you will be compensated based on the appraised value of the property. Otherwise, you have no other options other than repairing the home or forfeiting it entirely.

Can a buyer get a mortgage to buy a condemned house?

A buyer can’t get a mortgage for a condemned home – they can only borrow money from “hard money lenders,” which don’t have to answer to Securities and Exchange Commission and only to the Federal Reserve Board. To purchase a condemned property, the buyer has to work directly with you, the owner. Unfortunately, a buyer’s only option for financing will have to come out-of-pocket or using rehab loans. Buyers need to keep in mind the cost of repairs in a condemned home purchase, as well as any existing liens on the home that will need to be paid off.  

If you own a condemned home and are looking to sell fast for cash, click here to contact us. We’ll make you an offer and take that stressful element out of your life.

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