It shouldn’t come as a surprise that selling a house with subsidence can often be much harder and take a lot longer than selling a problem-free property. But just how many people are put off by subsidence?
We asked 507 people if they would be put off buying a house with a history of subsidence. The results are in…
A massive 91.7% of respondents said they would be put off buying a house with a history of subsidence. Even when the house is structurally sound and has been signed off by a structural engineer, the stigma associated with subsidence can still scare a lot of homebuyers away.
In this article, we’ll look at why it’s so difficult for homeowners to sell a property with subsidence and why so many buyers walk away when they hear the “S-word”. I’ll also give you my personal recommendation for the best ways to sell a house with ongoing vs historic subsidence…
(Want to skip right ahead, and see the smartest way to sell your property if it has subsidence? Hit the red button below to take a short 60-second quiz I designed for you).
1. Do people buy houses with subsidence?
The good news is people do buy houses with subsidence. The type of buyer and best way to sell your home will depend on whether you’re selling a home with ongoing subsidence or historic subsidence.
But what do we mean by “ongoing” and “historic” subsidence?
- “Ongoing” subsidence is active ground movement that is still causing problems now and will continue to do so until it is repaired.
- “Historic” subsidence is past ground movement that has since been repaired and not reoccurred. The house is structurally sound and has been signed off by a structural engineer.
Over the last few years, I have spoken with and helped many dozens of people with both ongoing and historic subsidence issues of different severities and causes.
It’s always surprised me that I receive as many calls from home sellers struggling to sell a property with a historic subsidence issue as I get from those with a current and ongoing issue.
Our survey has revealed that subsidence still carries a lot of stigma amongst homebuyers. Given the choice of two similarly priced properties, 92% of buyers will choose the one with no history of subsidence, even if everything has been put right.
Let’s look at each type of subsidence in turn, specifically why it’s difficult to sell and the best ways to sell a property with either ongoing or historic subsidence…
2. Do people buy houses with ongoing subsidence?
If you’re trying to sell a house with ongoing subsidence, your options are going to be limited to cash buyers or buyers with bridging loans.
A house with ongoing subsidence is uninsurable and therefore unmortgageable, meaning most “normal” homebuyers won’t be able to fund the purchase.
Generally, the people that tend to buy houses with ongoing subsidence are experienced investors, builders and cash buyers looking for “fixer-uppers”.
The best place to find this type of buyer is by selling through auction…
2.1 What is the best way to sell a house with ongoing subsidence?
My #1 tip if you’re trying to sell a house with ongoing subsidence is to consider selling by auction.
There are plenty of benefits to selling a house with subsidence by auction, over selling with an estate agent or to a house buying company. The benefits include:
- Experienced auctioneers. Auctioneers have considerably more experience selling properties with subsidence (aka “problem properties”) than estate agents.
- Motivated cash buyers. Generally, you’ll have an audience largely made up of experienced investors, builders and cash buyers looking to snap up a problem-property to fix up and sell on for profit.
- Speed. Auction sales can be completed in as little as 8 weeks from start to finish, making auction the second fastest way to sell a house.
- A more likely sale. You are 27% more likely to sell a house by auction, than selling via an estate agent. According to data from EIG, over the past 12 months around 78% of properties that went to auction sold successfully (compared with 51% of properties listed with estate agents).
- Fewer fall-throughs. Auction offers a greater deal of certainty, with less than 1% of auction sales falling through after they’ve been agreed. By comparison, a massive 25-40% of sales agreed through an estate agent fall through!
- Price. On average, houses sold at auction tend to achieve around 85-90% of their market value. You can attract a lot more interest (and subsequently drive up the sale price via “bidding wars”) if you’re willing to take a bit of a risk and set a low reserve price.
There are plenty more benefits to selling a property at auction. Read about them in my article: 17 Benefits of selling your house at auction.
If you want to learn more about how I helped one of my readers sell their house with ongoing subsidence by auction, you can read about Sian’s story here: Auction Case Study: Finding out your property has subsidence…when you’re 9,000 miles away.
Take the short quiz I've designed for you below to see if the same solution might work for you.
3. Do people buy houses with historic subsidence?
The house is structurally sound and has been signed off by a structural engineer. This means potential buyers can now obtain a mortgage and insurance policy, albeit at a higher price, for the property.
Technically, the number of potential buyers should increase dramatically, as you are no longer limited to cash only buyers.
In theory, selling a house with historic subsidence should be relatively straightforward. Right?
Well, 92% of the 507 people we surveyed disagree and said they would be put off if they found out the property had a history of subsidence. This could be for any of the following reasons:
- Property will be difficult and expensive to insure. I spoke with a reader who owned a property with a history of subsidence and had a £10,000 subsidence excess if they claimed on their insurance!
- There could be a risk of future subsidence. This depends on the cause of the subsidence and the treatment used to fix or remove the cause and damage to the building.
- The stigma surrounding the “S-word”. The stigma associated with subsidence can still scare a lot of homebuyers away.
- Would rather pick a problem-free property. Given the choice of a similar problem-free property for the same price, the vast majority of buyers will pick the problem-free property for peace of mind.
- Avoid potential stress and hassle when it comes to re-selling. It is always going to be harder and take longer to find a buyer for a problem-property, even if the problem has been resolved.
It isn’t all bad news though…! According to our research, 8.3% of people would still buy a house if they found out it had historic subsidence.
So, people do buy houses with historic subsidence. You just need to be prepared to wait for the right buyer to come along if getting the best price is important to you.
3.1 What is the best way to sell a house with historic subsidence?
There are two suitable ways to sell a house with historic subsidence. The best way for you to sell your house with historic subsidence will depend on whether you value your time or money more.
*Although selling to a house-buying company is the fastest way to sell your house, I would not recommend selling a house with historic subsidence to a house-buying company. You’ll suffer a double-whammy effect on the price you receive because of how subsidence devalues the market value of a property.
There are better options out there for you.
Here are my recommendations…
Option A: I value money over my time – sell with an estate agent
To get the best price possible for your house with historic subsidence, you should sell through a good local estate agent.
Any other sale method (auction, online agent, cash house buyers) compromises on the two key things you need to achieve the best price:
- Getting as many of the right people to view (and hopefully fall in love with) your home as possible.
- Someone to negotiate effectively with the buyers to drive up the price.
It is important that you tell the estate agent about the history of the subsidence at your house, including when and what work was carried out to treat it. You should provide any relevant documents confirming the property is now structurally sound and has been signed off by a structural engineer.
Ensure the estate agent you choose has been recommended to you by a local friend or family member.
You also want to make sure that the estate agent has experience selling properties with a history of subsidence. It is important that they are fully aware of the problems you may face and won’t scare any buyers away with misinformed horror stories.
Selling a house with an estate agent can be an extremely lengthy process though, especially when you are trying to sell a house with historic subsidence. If you value your time and want a quicker sale, then consider selling by auction…
Option B: I value my time over money – sell by auction
If you get fed up waiting for a buyer to come along, or you know you value your time over money from the outset, selling a house with historic subsidence by auction will be your best option.
As I said above, auctions can typically be wrapped up within 8 weeks, offering a greater deal of certainty and speed than selling with an estate agent.
It is much less likely that a buyer will back out of a sale too, as less than 1% of auction sales fall through after they’ve been agreed. This is partly due to the fact that buyers are contractually bound to complete the purchase once the hammer falls. Buyers must also pay a hefty deposit or reservation fee upfront.
If a buyer later decides to pull out of an auction sale, they'll forfeit the deposit or reservation fee and may have to cover the other side's costs plus any other losses they incur as a result.
Auctioneers also have considerably more experience selling properties with a history of subsidence than estate agents.
If you think selling by auction could be right for you, take the quiz below. I'll be able to make tailored recommendations based on your property and priorities.
By Matthew Cooper, Co-Founder of Home Selling Expert