A house that needs major work, or has fire, flood or damp damage, can still sell, but if lenders do not consider it habitable, most mortgage buyers are ruled out, which leaves cash buyers, investors and auction buyers who price in the cost and risk of the work. Before you spend money improving it, it is worth being clear about whether the work will add more than it costs.
Why does condition matter so much to lenders?
When a buyer applies for a mortgage, the lender’s valuer inspects the property to confirm it is adequate security for the loan. Lenders set their own criteria, but in broad terms they want a home that is habitable, structurally sound and insurable.
If the valuer finds a home that is not fit to live in, for example because of missing basic facilities, serious disrepair, or fire, flood or damp damage, the lender may refuse to lend, reduce the loan, or hold back part of it until specified work is done. Lenders also generally require buildings insurance, so a home that is hard to insure is hard to mortgage.
That leaves the buyer who needs a mortgage with a problem, and it leaves you with a smaller market.
Who buys homes that need a lot of work?
Several types of buyer can proceed without a standard mortgage:
- Cash buyers and property investors, who buy with their own funds and often plan to renovate and then sell or let.
- Developers and builders, who may see value in the plot or the potential to extend or convert.
- Auction buyers. A buyer at a traditional auction is committed when the hammer falls, so they need their funds arranged in advance, which suits buyers who can take on a project.
- Renovators through an estate agent. Some owner-occupiers actively look for a project and have the funds or finance to take one on.
How do auctions work for this kind of property?
According to RICS, at a traditional unconditional auction, contracts are exchanged when the hammer falls and the buyer is legally bound to complete. The buyer normally pays a 10% deposit at that point, and where the auctioneer uses the RICS Common Auction Conditions, completion is 20 business days after the auction unless the conditions say otherwise. Conditional auctions give the buyer longer to arrange finance, and our guide to the modern method of auction explains that option.
An auction brings certainty once the hammer falls, but there are fees, and there is no guarantee a lot will reach its reserve. Our comparison of cash buyers, estate agents and auctions sets out the trade-offs.
Free · No obligation
Want to know what a cash buyer would offer?
Tell us about the property in 2 minutes. Vetted buyers, individuals and institutions, reply with offers.
Cash buyers usually offer less than full market value in return for speed and certainty. You are free to turn down any offer.
Should I renovate before selling?
It is tempting to think that doing the work yourself will capture the uplift. Sometimes it does. Often, though, sellers who need to move on quickly find that major renovation costs more, takes longer and adds less than they expected.
Before committing, consider:
- Cost against uplift. Get written quotes, then ask an estate agent or surveyor what the home would realistically be worth afterwards. If the gap is narrow, the work may not pay.
- Time. Months of work means months of mortgage payments, council tax, insurance and bills on a property you are trying to leave.
- Consents. Larger works may need planning permission or building regulations approval. GOV.UK warns that without building regulations approval you will not have the certificates you may need when you sell, and buyers’ solicitors will ask for them.
- Risk. Renovations can uncover further problems, such as hidden damp or structural issues, that add cost.
Light work, such as clearing the property, making it safe and dealing with small repairs, is often a better use of money than a full refurbishment. We cannot tell you which is right for your home, but an estate agent or surveyor can help you run the numbers.
Fire, flood or damp damage: what should I do first?
Talk to your insurer. If the damage is covered, a claim may pay for repairs, which could change your options entirely. Keep your buildings insurance in place until completion. The Law Society notes that if a property is seriously damaged between exchange and completion, the buyer’s lender might not release the funds, which could cause the sale to fall through.
Check your policy terms. If the home is empty while you sell, read what your policy says about unoccupied properties and tell your insurer. Our page on selling an empty property covers this in more detail.
Be open with buyers. In England and Wales, the Law Society’s Property Information Form (TA6) asks about flooding and insurance, and the explanatory notes say buyers can rely on your answers. If you give misleading information, the buyer may be able to claim compensation after completion. If flooding was the cause, our guide to selling in a flood risk area explains what buyers and insurers will ask.
Advertising
Advertise here
Reach homeowners while they plan a sale: conveyancers, removals, surveyors, clearance and more.
Opens our media pack (PDF, 533 KB).Advertising standards
How do cash buyers price a renovation project?
A cash buyer works backwards from what the home should be worth once finished. From that they deduct the cost of the work, fees, finance, the time involved, a contingency for surprises and their own margin. The bigger or less certain the work, the bigger the deduction.
That is why offers for a home that needs major work are usually well below the price of an equivalent home in good condition, and a quick sale generally means accepting less than full market value. The benefit is that you avoid the cost, time and risk of the work yourself, and a cash sale does not depend on a lender accepting the property.
If you would like to see what buyers on our panel might offer for your home as it is, you can get offers for my home. It is free and there is no obligation, and you can compare any offer with the likely result of renovating first or selling at auction.
Is the process different in Scotland?
In Scotland, a seller must provide a Home Report when a buyer asks for one, and it includes a chartered surveyor’s single survey and valuation, so buyers see the condition of the home from the outset. Auctions differ too: RICS notes that Scottish law applies, and the auction conditions are known as the articles of roup. Our guide to selling a house in Scotland explains the main differences.
Common questions
Can I sell a house that is not fit to live in?
Yes. There is no rule against selling a home in poor condition. The difficulty is that buyers who need a mortgage may not be able to get one, so the realistic buyers are usually cash buyers, investors, developers and auction buyers, who price in the cost of the work.
Should I renovate before selling?
Only if the likely increase in price clearly outweighs the cost, time and risk of the work. Major works can overrun, may need planning permission or building regulations approval, and delay the sale. Light tidying and clearing can be a more cost-effective choice than major renovation.
Do I have to tell buyers about fire or flood damage?
You must answer the buyer's enquiries honestly. In England and Wales, the Law Society's TA6 form asks about flooding and insurance, and buyers can claim compensation if they are given misleading information. Tell your solicitor about any damage, claims and repairs.
How quickly does an auction sale complete?
At a traditional unconditional auction, contracts are exchanged when the hammer falls. RICS says that where the auctioneer uses its Common Auction Conditions, completion is 20 business days after the auction, unless the conditions say otherwise. Conditional auctions give the buyer longer.
Related guides
- Selling a house with subsidence Disclosure, engineer reports, insurance and historic versus active movement.
- Selling a house in a flood risk area Flood risk checks, Flood Re, insurance, disclosure and pricing.
- Cash buyer vs estate agent vs auction: which suits you? Speed, price, certainty and fees compared across the main routes.
- The modern method of auction explained Reservation fees, timescales and the criticisms of conditional auctions.