Supposedly there's a house for every buyer. When a home has a failed septic system, however, a buyer can be tough to find -- tough but not impossible. Unless local laws state otherwise, you may sell your home with a failed septic system as long as you fully disclose the system's defects. Although the price must reflect needed repairs or replacement of the system, the challenges of selling a home with a bad septic system are not insurmountable.
Feasibility of a New Septic System
The major factor that determines whether a buyer will purchase a home with a failed septic system is the likelihood that you or he can repair or install a new system. If repair isn't possible, meet with a municipal sewage enforcement officer to find out if there's room for a new system. If there is, the next step is a percolation, or perc, test to determine whether the ground is absorbent enough to support a new system. A hydraulic load test may be necessary if the home has sat vacant for a period of time. This test mimics household water usage and measures the ground's ability to absorb it. If the perc and hydraulic load tests go well, you'll hire an engineer to complete a septic design, and then purchase a system and have it installed. Costs vary by location and system type, but they range from several thousand dollars to more than $25,000.
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Alternative to Replacement or Repair
When the problem is ground absorption rather than the septic system itself, you possibly can use the system indefinitely by aerating on a regular basis. Aeration is the process of poking holes in the drain field soil to help the water seep in and absorb. There's no guarantee that aerating will work or that it's even allowed in any particular location, but a buyer may be willing to take a chance if use of the home is likely to be light or infrequent as might be the case with a vacation property.
Since homes without septics have little value, lenders consider them a poor investment and won't issue loans for their purchase. However, a buyer can pay for the repair with a rehab loan he secures at the same time he gets his mortgage loan. In some cases, financing is also possible if the seller places in escrow enough money to cover the repair. In either case, the buyer would make the repair after closing on the property. The other alternative is for the buyer to pay cash.
Price the Property to Sell
A failed septic means a substantial drop in price in even the best circumstances. Market value is determined locally by comparison to similar properties, but the price should drop enough to cover the cost of a new septic and reimburse the buyer for the inconvenience if you know for sure that a new one is feasible and you know what kind the property requires. If you don't know if the system can be replaced, or you know that it can't be replaced, you'll have to consider a very drastic price reduction.