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Even many of the newest buildings do not pass code but slip by the city inspector. As an inspector and architect I advise many clients on this issue. It is not about passing or failing but how the buyer wants to proceed knowing what is not to today's standards. Sellers can list on an "as is" basis but may have to come down from the median price to give the buyer equity to repair and update the property.
I do preinspections for sellers to give you a chance to repair defects at a cheaper price than the money you will spend in a rush to get the deal done or the money taken off the sale price.
Level Home Inspections
Have you been able to take care of your parents property? I'm so sorry to read that your parents were taken advantage of.
The answer to your question is yes it can be done.
I would be happy to send you a comparable market analysis if you haven't received one yet.
Realtor, CDPE, REO Agent
Keller Williams Preferred Realty
My answer is short and sweet. Yes you can and the market is HOT! The market has changed so dramatically over the past few weeks that what may have seemed like lemons in 1992 can potentially be made into lemonade in 2013. Get a valuation from a couple of Brokers and see who you gel with. Move your parents forward. If you do not have a referral or know a Broker and would like more info my contact email is email@example.com take care!
Sorry to hear your parents were taken advantage of. The property can be sold, you must disclose all the material defects that you / your parents know of to potential buyers. Your potential buyers will probably use either cash or conventional loan. An investor would be most likely to purchase it at a discounted price that you and the buyer negotiate. I highly recommend you use a realtor (myself or another realtor) to help you get through this. I wish you the best with this, I would be happy to discuss this more with you and your parents.
Not to sound glib, but sure, you can sell anything to the right buyer. In this case, as others have noted, you'd probably be dealing with someone experienced in fixing up homes for resale, and who deals in cash. A traditional buyer purchasing with a loan probably wouldn't want to take on such a project - nor would their bank likely approve a loan if the property is in such disrepair. But there is no law or regulation that says a structure has to meet current codes in order to be sold. (There *is* a law that says you need to disclose any material conditions you know about though!)
As it happens, I do work with some folks who do repairs and flips - and they're actually looking for their next project! Give me a call and we can come out and take a look. :-)
Given the shortage of inventory in our market today... a house priced for it's condition sells fast. There ARE buyers for EVERY home... the question is merely what "terms" do you offer in your sale. If the home will not meet FHA/VA guidelines... don't offer those terms. Offer CASH and Conventional terms...and disclose the items on the Seller property disclosure document that your parents know for sure. Buyers should do inspections.... whether they are investors or owner occupants! Cash buyers may waive inspections & an appraisal if they feel their own assessment is comprehensive enough to feel comfortable buying the property. Most agent's will be able to advise you on financing requirements for FHA/VA terms.. It would be in your best interest to have more than one opinion.
If you consider accepting an offer that has Conventional terms... there will be an appraisal but if your buyer has 20% or more down....the repairs needed may not be "financing conditions" and that is the key for you if you decide to accept an offer w/financing terms. Work with an Agent that knows your market area well... I hope that you get sound advice on this transaction to reaffirm for you that there are good Agents out here!
I can appreciate your situation. The type of Buyer who would like to invest in the property you've described is a cash buyer. Believe it or not, we have lots of cash buyers in this market. So, the answer is, yes, you can sell a property which is not up to code but it might take an investor rather than a buyer who is getting a traditional loan.
There are a lot of unknowns in your question. I would be very happy to talk to you, to look at the property, and to help you figure out what is best for your parents. I've been in the Denver real estate business for over 20 years so do have a lot of experience plus teach real estate law classes. I'd be glad to help you! Please give me a call or Email at your convenience.
Kayla Okafor, MBA
Denver Real Estate Connection
Ofc: 303-455-0244, Cell: 720-296-2949
Now on to your questions - Homes that don't meet code sell all the time. How much of a financial impact the issues will have on the house depends on the issues. I could advise you better if I knew more detail.
Also, there's a fallacy about a house 'passing inspection'. The inspector doesn't 'pass' or 'fail' a house. He notes all the deficiencies he can find, then the buyer decides if they want to proceed with the purchase or not, or maybe they'll try to negotiate some repairs or a lower price.
The key is to disclose every issue the sellers know about, so the buyer has all the information to make a proper decision.
And, of course, to hire a reputable REALTOR who is familiar with the area where the home is located.
And, you will need to price it accordingly.
A lot of people are looking for houses like that.
It will limit the type of loan that the Buyers can use, but it is doable.