Can I Short Sale My House With Structural Damage?

Real Estate Agent with Keller Williams Realty Louisville East (502) 664-7827

Yes, you can short sale your house even with structural damage. Indeed, the lender may be more inclined to settle your loan because of the structural damage.

The bank does not want to own your house.

But who will want to buy my house with structural problems?

Someone will. Price fixes everything. The price will have to come down as an incentive for someone to take the risk and do the work.

But I owe too much on my house...

Once we, your short sale Realtors, submit the buyer’s offer to your lender for approval they will send an appraiser to your house. Your lender wants to confirm today’s current value in its as-is condition, including the structural damage. The appraisal should reflect the reduced value of the house.

Your lender does not want to foreclose and make your structural problem their structural problem. They should let the house sell at as-is market value regardless of how much you owe on your mortgage. If they take the house in foreclosure they will have to sell it cheap anyway.

But the buyer won’t be able to qualify the house for a new loan...

Plenty of solutions here:

  • There are rehab loans available to buyers, such as HUD’s 203(k) loan
  • Some buyers have cash, and don’t need a bank committee to approve the house
  • If the damage is so great, only real estate investors will buy the house with the intent to fix and resell or fix and keep as a rental. Investors often have financing options that aren’t available to homeowners.

It is possible sell a house with structural problems, even if you owe more than the house is worth

You need the right short sale Realtor on your side. If you are in the Louisville KY area, please call me to help you out, the bank pays my commission out of their proceeds, so you don’t have to.

Posted by



Dave Halpern, Realtor

The Dave Halpern Real Estate Group

Keller Williams Realty Louisville East


(502) 664-7827



View Dave Halpern's profile on LinkedIndave_halpern twitterhalperndave_facebookDave Halpern QR CodeLouisville Foreclosure Realtors Dave Halpern

Comments (19)


I short sold a home that had a broken sewer line under the concrete slab. Everytime the washing machine pumped the water out, the kitchen floor got wet.   The bank couldn't wait to get rid of that one and the investor was happy since he was a contractor.

Feb 26, 2011 04:02 AM
Chris and Berna Sloan
Group 1 Real Estate - Tooele, UT
Tooele UT

Great information, Dave. Sometimes people get bogged down in the calamity and think there's nothing that can be done. There's generally a solution that is better then nothing. Getting the info out is key. Thanks

Feb 26, 2011 04:03 AM
John Michailidis
Real Property Management of Sarasota & Manatee - Sarasota, FL
Real Property Management of Sarasota & M

Good blog post Dave. Thank you for sharing it with us!

Feb 26, 2011 04:07 AM
Kieno Simeon Your South Riding Real Estate Consultant
Keller Williams Realty - South Riding, VA

Great post.  It's amazing how many folks that don't realize the power of a 203k rehab loan.  It saved me in a short sale that I listed.  Client was happy with her newly renovated home and the bank was happy to get it off their books!

Feb 26, 2011 04:47 AM
Tony Morganti
RE/MAX Crossroads in Cuyahoga Falls and Stow, Ohio - Cuyahoga Falls, OH
CRS, ABR, SRES - Cuyahoga Falls, Stow

Last year a home I had listed went under contract for a short sale. It had already been appraised for the short sale prior to the buyer making the offer.  As a result of the home inspection it was determined that there was a foundation issue and the buyer signed a release.  I requested the lender to do a second appraisal and I met the appraiser with the home inspectors report regarding the structural issue.  The second appraisal came in $10,000 lower and we then sold the home to a second buyer at the lower price.  It may just take a little more effort........but it can be done.

Feb 26, 2011 05:23 AM
Keith Pentz
RE/MAX ADVANTAGE 1 - Shrewsbury, MA
Keith Pentz

Awesome post Dave...we are seeing the banks be much more understanding when it comes to combining 203K financing with short 45 days from acceptance on these deals is becoming more of the norm here

Feb 26, 2011 05:54 AM
Barb Van Stensel
Chicago, IL

Great suggestion and it is more then likely true that the bank doesn't want the structural damage.  My seller disclosed on the Property Disclosure form about a roof that wasn't leaking on her garage but that it had only a couple of years to its life and the lender wanted certification of the roof, even after she had a complete tear off and redid the entire roof. 

Feb 26, 2011 07:47 AM
Loreena and Michael Yeo
3:16 team REALTY ~ Locally-owned Prosper TX Real Estate Co. - Prosper, TX
Real Estate Agents

I'm a firm believer that with the right price, any house with any condition sells!

Feb 26, 2011 07:49 AM
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA


Very good post.  These are the type of house that banks do not want to own so they may be amenable to the short sale at a reduced rate.

Feb 26, 2011 08:10 AM
Steven L. Smith
King of the House Home Inspection, Inc. - Bellingham, WA
Bellingham WA Home Inspector

No question about that. We see that all the time out here. They buy them like they are, bugs and damage and all.

Feb 26, 2011 08:11 AM
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Hopefully end consumers who read this blog post are getting encouraged that they don't have to go to foreclosure because of a major repair. Realtors and their sellers/buyers nationwide have experienced the short sale as a solution to underwater mortgages on houses with major problems!

Feb 26, 2011 08:13 AM
Patricia Aulson
Realtor - Portsmouth NH Homes-Hampton NH Homes

Homes that are realistically priced usually sell at some point.  Condition will play a part.


Patricia/Seacoast NH & ME


Feb 26, 2011 11:17 AM
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

There's a buyer for every home, even a short sale.

Feb 26, 2011 12:18 PM
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

I sold a short sale in which the pipes in the ceiling broke and flooded out the house. The bank dragged its feet -- back in the old days at Bank of America before Equator -- and mold grew to the size of basketballs. It was vacant and a shambles. The sellers were in tears, sobbing that nobody would buy their home now. But somebody did. If the price is right, anything will sell.

Feb 26, 2011 01:38 PM
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

It really depends on the bank and having a committed agent.  It is not necessary easy because banks want to assume that it will sell for the same price as a home without the same damage.  You have to educate them.

Feb 26, 2011 02:25 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Dave  -  I agree with TNI and you.  Price will make the home saleable, and yet the bank will have to be made to understand the true value.

Feb 26, 2011 02:59 PM
Lora "Leah" Stern 914-772-4528
Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY
Real Estate Salesperson

Dave, what a great post and a good reminder that price is a great equalizer. No matter the condition, if priced right it will sell.

Feb 27, 2011 10:14 AM
John Saari
Worcester, MA
"The Mortgage Buddy"

Fantastic post. Utilizing the 203k loan and the Fannie Homestyle will give the buyers the best opportunity to maximize their purchase. The Fannie Homestyle can be used on second homes and investment properties. It's the little known gem in the mortgage industry.

Feb 27, 2011 10:53 AM
Fred Sweezer Sr.
Hud Certified 203K Consultant - Long Beach, CA
Certified Home Inspector

Thanks for the blog many first time home buyers must have read your post because many are using 203k and Homestyle renovation loans programs.

May 03, 2017 03:10 AM

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