Last updated on May 13th, 2024 at 01:10 pm
A Condemned House defined
A condemned house is a building whose status has been declared unfit for occupancy or use by a government or other authoritative body due to health, safety, or structural concerns.
This conclusion is made after an inspection of the property by a building or health department, or if the structure has been damaged extensively.
Condemned houses [may be in a state of disrepair] or have deficiencies that pose a danger to people who live or work in them.
In the United States, over 6,000 properties are condemned by local governments each year. (Source: National Real Estate Investors)
They may have structural issues like a collapsing foundation or a roof that needs to be replaced. They may have problems with electrical, plumbing, or other systems that are simply unsafe for people to use.
Condemned houses are typically not habitable, the living conditions are unsafe for human habitation and must be repaired or demolished in order to be brought up to code. Each situation is different.
If a house is condemned, the owner may be required to make repairs or improvements to bring it up to acceptable standards.
In some cases the house is only worth the land it is on.
Occupants may be required to vacate the property and and not enter the premises until the proper repairs have been. made.
What happens when it is declared condemned
The rules can differ between states and counties, however there is always a standard for condemning property.
If the local authorities are aware that a residence is not in compliance with their building codes, they will inform the property owner about the violation.
When homeowners are informed, they are given a specific amount of time to correct the issue.
If no action is taken, then the next step in the process occurs. The owner may contest the violation or request for additional time to correct the issue.
If the problem has not been rectified, the property be at risk of being condemned. The owner is able to appeal. If the appeal is lost then it’s official, the property is declared condemned.
It is no longer legal to remain in the home. The property’s owners, occupants, or tenants will be required to leave.
The municipal authority may have the option of making said repairs on its own. If not, the house will be destroyed.
But the owner is not off the hook, he or she will be responsible for all costs associated with this process.
What are the condemnation laws
It’s important to understand what triggers a property to be declared a “condemned.
A home can be condemned due to deterioration that has been gradual in time, the home isn’t up to code, or previous work on the home wasn’t approved.
The issues that could lead to violations of local building codes are;
- Damage to the property
- Insufficient ventilation
- Sanitation Systems are impaired
- Insufficient heat or air conditioning
- Electrical systems that are unsafe or improperly installed
- Unhealthy conditions like the growth of mold or pests
- There are no utilities running to the property (electricity water, electric, etc.)
Based on the severity of the issue, a few problems can be easily fixed and the home inspected.
If there are a litany of issues across the house, the costs and time required to make the repairs might not make monetary sense.
If you’ve done any renovations on your own or with an unlicensed contractor and didn’t have the appropriate permits, your house may not pass the inspection.
This could mean you have to have your work done all over again. If you don’t correct the issue, the house may end ending up as condemned.
If you own a home that is vacant and disorganized for a an extended period of time, the local government could declare it in a state of disrepair and demolish the property without citing specific reasons.
Potential Challenges of Selling this Type of Home
In the United States, approximately 1 in every 7,000 homes is condemned each year. (Source: National Real Estate Investors)
Are you able to sell a condemned home in your neighborhood?
It could depend on the laws in the area you reside.
The laws and regulations governing housing are implemented and enforced at a local level.
In your state or county, the sale of abandoned property might not be allowed until repairs have been completed and the property has been re-inspected.
If your property is declared a condemned, you will have to act, fast, you won’t have much time or you might lose it!
The typical homebuyer isn’t prepared to take on the challenge of purchasing a demolished property.
Many real estate agents will not spend their time listing the property or showing the property to their clients until it is accompanied by an Occupancy Certificate and the ownership rights can legally transferred legally.
A majority of buyers need to obtain a loan to purchase the house.
The mortgage lenders won’t even consider a loan to purchase a demolished property due to the following reasons:
- The property may be confiscated from the state.
- A property that is condemned is not able to be used for habitation.
- Banks won’t loan money on this type of home.
Options to Sell a Condemned Property
There are two basic methods to sell a house which has been deemed to be declared a crime.
- The first step is make all the necessary repairs to get the home in an acceptable state to sell.
- After that, you’ll need to get it inspected by the appropriate authorities before being declared as habitable. Then you can sell the house.
- Option two is to sell to an investor “as-is” without making any repairs.
Sell the house "as is" on your own
When a house is condemned, the owner usually has had sufficient time to make the repairs or find another solution for the property.
If the property isn’t repaired by this time, there probably won’t be further changes.
There isn’t much time before the owner’s fate will be sealed.
Can you fix the home after it’s been declared condemned?
Approximately 70% of condemned homes are sold to buyers who plan to renovate and live in the home. (Source: National Real Estate Investors)
Where to market property
There are a variety of ways to market a property that is in bad condition
Sell to a Real Estate Investor
It is about finding the right buyer.
Real estate investors have experience and purchase property as an investment, and have the knowledge and cash to buy homes in various states.
Typically an investor with this amount of cash on hand has been through this process before making it much easier than a traditional sale.
Cash buyers don’t need to worry about qualifying for a loan or deal with jumping through hoops!
They also should be familiar with building codes and the condemnation process in your county.
Buyers of condemned property should be aware of how to plow through the legal process in order to bring the property back to regular living standards.
The buyers will fix the house, and then sell it.
Some investors will repair the house and then rent it out to tenants.
Repair the home on your own and then sell
- If you’ve got the financial means to bring your home up to standard; and have the time and a plan, then yes, you should do it on your own.
- It is important to estimate the cost of repairs and calculate the value of your property after the work is completed. Will you make a profit? Black mold, housing code violations and a number of other issues can ramp up costs.
- In the majority of cases when dealing with a condemned home, the fastest way to dispose of the home is usually the best option.
Renovating or repairing the home can be as easy as hiring the right contractors.
But the fix might require even more rehab and construction.
- HVAC and electrical repairs may require mechanical plans.
- Once your plans are approved, permits will be granted.
- The next step is to speak with several general contractors and get bids on the project. If you live in a major city, then those bids should be competitive.
Not only are there inspections conducted on continuing work like electrical and plumbing, there will be a final inspection.
This inspection will confirm that the work performed is in line with the pre-approved plans.
After work is approved, a Certificate of Occupancy will be granted, and the home can be sold in a traditional fashion with a realtor if you wish.
A cash offer from home buyers will make sense if the cost of repairs won’t justify profit on the home you will earn once repairs have been made and the property sold and listed on the MLS.
Selling for Cash: the benefits
The process of selling a home that in condemned status to an investor in real estate has many advantages:
- If you decide to work with a house buyer, you can sell your home and close fast, in about 2 weeks. Cash sales are an essential aspect of selling your home, especially if it is condemned.
- Sellers won’t pay closing costs or commission to a real estate agent and their broker.
- You can avoid the hassles like open houses and showings. This is important too many sellers who don’t want people coming and out of the home.
- Sellers won’t make any repairs.
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