How to sell property with structural issues?

When trying to sell a house, it is essential to understand what buyers look for in a property. Besides a favourable location, spacious rooms and amenities, the property’s structural condition is a key factor influencing home-buying decisions. While a well-maintained will attract more buyers, the presence of structural issues can turn them away. Many home sellers try to hide details about structural problems in an attempt to sell their property faster. However, this is not a good practice and can lead to legal action from the buyer. While staying transparent when dealing with prospective buyers is crucial, home sellers can adopt some simple strategies to sell a property with structural issues.

What are structural issues in a property?

Structural issues in a property refer to construction and structural defects that develop over time due to poor design, use of substandard materials or wear and tear. These issues can negatively impact the building’s structural integrity, causing safety risks and may lower the property’s resale value.

How to diagnose a structural problem?

Property owners must conduct regular inspections of their property to identify potential structural issues at an early stage. To diagnose a structural problem, one can have a visual inspection of the property and look for potential issues. This should be followed by a detailed examination of the property and professional assessment with the help of a structural engineer or by hiring professional property inspection services.

Some examples of structural issues are:

• Foundation problems such as foundation cracks and shifting of materials over time
• Cracks in the walls, floors or ceilings, broken or loosened tiles and uneven surfaces
• Windows and doors are difficult to close, indicating potential settling issues
• Plumbing issues include leaking pipes, faulty fixtures, clogged drains, etc.
• Drainage problems causing accumulation of water
• Faulty electrical systems posing fire risks

Timely property inspections could prevent permanent damage to the structure. On the other hand, ignoring such problems could lead to severe issues, creating the need for extensive repairs and high expenses.

Can a property be sold if it has structural issues?

A property owner can sell a property that has structural issues. However, it may not be as easy as selling a property without structural problems. However, there are regulations under the RERA, wherein a seller should disclose such structural issues to the potential buyer and rectify the issue within five years of possession without charging any money from the buyer.

Property owners should understand that the presence of structural problems in the property can impact the resale value. This should be considered when determining the price for selling the property. Thus, the property seller should consider rectifying the structural defects before selling the house.

Key considerations when selling a house with structural defects

#1. Evaluating the severity of structural issues and potential expenses

The foremost thing a house seller should do is to figure out the severity of the structural problem in the property. This requires a thorough inspection of the property and documenting the extent of damage it has undergone. The seller should address some key questions, like how much time and money it will require to repair it.

The expenses will depend on the extent of the repair work undertaken. If one plans to sell the property, the seller will have to spend time on home staging to depersonalise and give a fresh look to the property. The overall costs of the repair and renovation may range from Rs 2 to 5 lakh, depending on various factors like property size, materials, budget preference, etc.

#2. Assessment of property’s resale value

Pricing a property with structural problems can be tricky. Typically, the price will be lower than that of similar properties in the area, which do not have structural issues. Buyers may negotiate to bring the price further down. Hence, sellers should set a realistic price for their property to attract potential buyers. This requires a proper analysis of the price trends of similar properties in the locality. One can approach a real estate agent or hire professional valuation services.

Calculating returns on investment (ROI) for property

When determining the property’s price, the seller should consider the estimated repair cost. The various costs incurred by the seller include:

• Acquisition costs: This includes the costs incurred during purchase, stamp duty and registration charges, brokerage charges and total interest component over the value of the home loan.
• Operational costs: Maintenance charges, property taxes, costs of repairs and renovation
• Selling costs: Brokerage charges and costs involved in advertising the property online or offline

ROI is calculated based on the formula:

ROI = (Current value of investment – cost of investment/cost of investment) X 100

#3. Checking home insurance coverage

If the property owner has taken a home insurance policy, they can get coverage for financial loses incurred due to damages caused by natural calamities or events like fire, theft or malicious activities. Typically, home insurance policy covers the cost of repairing the house structure as per the policy terms.

#4. Understanding RERA regulations when selling a house

According to RERA regulations, if the property has structural issues, the developer is legally bound to rectify any structural or workmanship defects within five years of handing over the possession to the buyer at no additional cost to the buyer.

The buyers are also responsible for notifying the developer immediately after noticing the structural issues. If the issues are not fixed within 30 days of intimation, the buyer has the right to register a complaint with the RERA authority of the relevant state and ask for compensation.

The seller is also legally bound to disclose any structural defects in the property to the potential buyer in the sale agreement. When planning to sell a property, property sellers should be aware of the RERA guidelines and take the necessary steps to prevent legal issues.

#5. Ensuring transparency without deterring potential buyers

When dealing with prospective buyers, property sellers must ensure they disclose all known issues with the property. They should be ready to address potential buyers’ questions and concerns about property’s condition, history and potential repairs. This helps develop trust and reduces the risk of potential legal disputes.

#6. Smart marketing strategies

To prevent potential buyers from turning away from the property, sellers should focus on highlighting the positive aspects of the house, such as the location, size, amenities, views and scope for upgrades. When considering listing the property online, make sure to choose a creative description highlighting the key features of the property and its location advantages. Hire a professional photographer to showcase the property and attract potential buyers.

Selling a property without fixing structural problems

When a property owner plans to sell a property without fixing structural problems, they should make sure to disclose all the details about the existing structural issues. This can pose certain challenges before them, like selling the house at a lower price than the market value. However, if the seller decides to negotiate the repair costs, they will have to weigh the pros and cons. This is because it would still have to spend the money, and the repairs will take time.

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Homeowners planning to sell their property with structural issues should assess the available options, such as selling the property ‘as-is’, going for partial repairs or full renovation. This includes evaluating the potential expenses they would incur. They can consider working closely with an experienced broker.

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