Selling a House That Needs Major Repairs in Alabama

Alabama follows caveat emptor, which means let the buyer beware, for the sale of used homes. In general, the seller of a used house has no duty to volunteer information about its physical condition, and the buyer is expected to inspect.

Alabama courts have recognized exceptions, rooted in the state's fraud statute (Ala. Code § 6-5-102). A seller can be responsible for disclosing a problem when:

• the seller knows of a material defect that affects health or safety and that the buyer would not readily see,
• the buyer asks a direct question about a defect, which has to be answered truthfully, or
• a fiduciary relationship exists between buyer and seller, meaning the buyer has reason to trust the seller to act in the buyer's interest.

An as-is clause in the contract carries real weight. The Alabama Supreme Court has held that a buyer who agrees to buy as is and does not inspect generally cannot rely on those exceptions. Even so, the practical rule is simple: answer every question honestly and tell buyers about known safety problems. For a specific disclosure question, talk to an Alabama real estate attorney. This page is general information, not legal advice.

Most buyers use a mortgage, and the lender gets a say in the house. An appraiser has to value it, and FHA and VA loans come with minimum property standards. A roof at the end of its life, a failing foundation, active leaks, unsafe wiring, or utilities that are off can hold up the loan until repairs are made, and conventional lenders flag many of the same problems.

Then comes the buyer's inspection. A long report can lead to a repair request, a price cut, or a canceled contract. Each round costs you weeks, and a house that falls out of contract once tends to draw more questions from the next buyer.

For a house with major problems, the buyers who can actually close are mostly cash buyers and investors. That is why it pays to know your cash number before you spend anything on repairs.

• Foundation. Cracks, sloping floors, and doors that stick. Lenders may want a structural engineer's report before closing, and repair bids can vary widely. Buyers price in the unknown.
• Roof. An old or leaking roof can stall a financed sale, because appraisers and insurers both look at it. A buyer who cannot get the house insured cannot close on a loan.
• Plumbing. Old galvanized or cast iron lines, slab leaks, and sewer line problems often show up only at inspection, and they tend to bring big repair requests.
• Fire or water damage. Tell your buyer about any insurance claim that is open or was paid. Claim money, the mortgage, and the sale have to be sorted out together before closing.
• Mold. Mold usually follows water, so fixing it means fixing the moisture source first. Mold you know about in the living areas is the kind of health issue you should disclose.

Repairing first can make sense when the work is modest, you have the cash, and you have time. It stops making sense when:

• the repair bids are bigger than the price increase the repairs would bring,
• you would have to borrow to pay for the work,
• nobody can tell you the full scope until walls or floors are opened up,
• you are paying a mortgage, taxes, insurance, and utilities every month while the work drags on.

A simple test: get one or two contractor bids. Add the months of carrying costs while the work is done and the house sells. Add a cushion for surprises, because old houses have them. If that total is close to or larger than the difference between an as-is price and a fixed-up price, selling as is will likely net you as much or more, with far less risk.

Here is a simple way to line up the two paths for your own house:

1. Fix and list. The fixed-up price, minus repair costs, minus commission, minus your closing costs, minus months of carrying costs, minus any repair credits the buyer negotiates after inspection.
2. Sell as is to us. Our offer, minus your loan payoff and any liens. No commission, and we pay the normal closing costs.

Our offer will be below what the same house would bring fully repaired, because we are the ones taking on the work and the risk. The point of the math is to compare the money you actually keep, and how sure you are of getting it.

We buy houses in the condition they are in. You do not repair, clean, or stage anything. We look at the house, usually give you a cash offer within about 24 hours, and you decide with no obligation.

Because we are not borrowing to buy, there is no appraisal or loan approval that can fall through. We close through a local title company or closing attorney in as little as 7 to 14 days, or on the date you choose. We cover the normal closing costs, you pay no commission, and your loan payoff, liens, or back taxes are paid from the proceeds at closing.