Selling a House with a Failed Septic System: Will Buyers Even Consider It?

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Your septic system safely treats the wastewater from plumbing that comes from your home. Through a combination of natural and chemical processes, your septic system takes the water produced by bathrooms, kitchens, and laundry systems and breaks down organic matter safely, while sorting it from the more dangerous grease and solid matter you might find in wastewater. All in all, it’s a pretty important job.

When your septic system does what it’s supposed to, you likely don’t notice how hard it’s working or give it a second thought. But perhaps you’ve started to notice some red flags, like standing water or less-than-peachy odors near your tank. And, because life is always convenient, these red flags happen to emerge right around the time you’d planned to sell your home.

Maybe it was bad maintenance, poor design from the beginning, or just dumb luck, but the bottom line is: Those signs point to your septic system failing. If your system’s report card comes bearing a big fat F, you might be tempted to just cut and run — sell the home as is, instead of fixing the problem.

But can you sell a house with a failed septic system? Will any buyer accept its condition and is it legal to sell your house this way?

Whether you have a choice in this matter will depend on the rules governing your area, the state of your system, and the expectations of local buyers. Here’s what you need to know about selling your home with a failed, or failing, septic system.

A failed septic system belonging to a house for sale.
Source: (Jo Ann Snover / Shutterstock)

Can you repair your failing septic system rather than replace it?

Before you jump to any conclusions about your septic system, hire a plumber with a speciality in septic to come assess yours. This plumber will look for any of these common issues, and can determine whether your system is salvageable. It could be that:

You’ve neglected to maintain the system.

Homeowners should regularly hire a professional to inspect and pump their septic system, every three to five years, according to the Washington State Department of Health. If you can’t remember the last time you had your system serviced, poor maintenance might be the culprit.

How to fix it:

Hire a professional to pump and thoroughly clean your septic system to reverse its failure. The cost to clean a system varies based on tank size, but it will generally cost between $295 and $610. If a deep clean doesn’t do the trick, sometimes replacing the baffle, the component that prevents scum buildup in the tank, can help. This replacement will cost between $300-$500. However, this likely won’t work if the system’s been grossly neglected.

Too much water is rushing your septic system at once.

Septic system tanks are designed to manage water based on the size of the home. So, when your water use exceeds capacity, the system can’t handle it. This can cause wastewater to back up into your pipes, drains, the home itself, or the surrounding property.

How to fix it:

Pump and clean the system, as recommended above. However, if the septic system is too small for your home, you might have to consider a full replacement (more on that below) to increase its capacity.

Tree roots or other outdoor landscaping has damaged the system.

Tree roots seeking moisture and nutrients or certain paving materials in the wrong place can unintentionally damage your septic system. Roots may grow into the system, or even just grow nearby, and as a result crush and damage components of the system directly or indirectly compact the soil around the system, preventing proper discharge or damaging pipes. Installing a paved driveway or car park too close to the drain field can yield similar damage.

How to fix it:

Depending on what component is damaged, there’s a chance of repair. Replacing a crushed or damaged pipe will cost around $1,520.

Your septic tank was never installed correctly.

If a septic tank was improperly installed, there’s little to keep it from failing. It might be the wrong size, in a bad location, or not watertight.

How to fix it:

You might choose to replace the drain or leach field to prevent further failure. Replacing the field entails digging up your septic system and placing it in a new, uncontaminated field on your property. This can range anywhere between $2,000-$10,000 based on the size of your system and its location. However, this solution only works if the septic tank is in good condition and can be repurposed.

Depending on the condition of your septic system, you may be able to fix it with one of these repairs. You won’t know what’s wrong with it until a professional starts to dig in. However, a repair is oftentimes preferable to replacement, in terms of price and the scope of work required. Installing a whole new system will cost between $8,000-$25,000 on average, while repairs typically top out around $10,000.

Inspecting your septic system

To prevent your system from getting to the point of failure, the National Association of Certified Home Inspectors recommends annual inspections, in addition to an inspection once the home is on the market.

If you have an offer on your home, you might be required to get a septic tank inspection before closing. Some mortgage companies insist on the septic inspection. If it’s not the mortgage company requiring an inspection, it might be your state or local government. Consult with your real estate agent to make sure you’re not evading any local septic laws.

Depending on the inspection process, you might have two professionals take a look at the system. First, a home inspector might request to take a look at the system while on your property. Typically, this is a cursory glance but not a comprehensive review. Secondly, you might be required to conduct a specialty septic inspection. A professional septic inspection runs between $100-$250 and should take under three hours.

How to tell if your septic system is beyond repair

A failed septic system is one that can no longer treat or distribute the wastewater. You may be dealing with backed-up pipes and drains or a flooded field. This poses a health risk to you and your surrounding community. A broken septic system may lead to contaminated groundwater, unhealthy drinking water, and an increased chance of bacteria and contaminants in the area.

Signs of a failed septic system may include, but aren’t limited to:

  • Slow flushing toilets, or backed-up drains.
  • Water and/or sewage backing up into the home through toilets, sinks, and drains.
  • Standing water near the tank or around the drain field.
  • Sewage smells near the tank.
  • Green, springy grass growing rapidly around the tank. Brown, or nearly dead grass, over the tank is often the sign of a healthy septic system (ironically enough!)

If multiple of the above issues occur, it’s likely that your septic system has failed. That means not only is your system posing a health hazard, but standing water in your home and on your property is at risk of additional damage.

Books used to sell a house with a failed septic system.
Source: (Patrick Tomasso / Unsplash)

Your septic system has failed. Now what?

If you know your system has failed, there’s no turning back. Now’s the time to collect as much information as possible, and decide how best to proceed while considering costs, the laws in your area, and your neighborhood.

Check your local laws.

When selling your home, failed septic system and all, you’ll need to check first with your real estate agent. In some states it’s illegal to sell your home if the system isn’t up to code — which includes a failed system. Legality might also vary county to county, so be sure your agent understands the laws in your area before you start prepping for a sale.

If you live in a state or area where you can’t sell a home without a working septic or sewer system, then you are going to have to replace it before the sale.

Get an estimate for replacement.

The cost to replace a septic tank will vary based on its size, as well as the cost of permitting in your area. You can expect to pay, on average:

  • $600-$3,000 for the tank.
  • $1,000 or less for permitting.
  • $3,123-$9,404 for the installation of the new system.
  • $1,200 – $4,500 for excavation and land prep.

With an estimate in hand, you’ll have a better idea of how to proceed.

Consult with neighbors.

Instead of replacing the septic system, you might be able to hook your home up to a sewer line that didn’t exist when the house was first built. The process requires decommissioning your septic tank and installing new plumbing lines on your property. You may also need to pay permitting and connection fees charged by your city or municipality. Connecting your home to the sewer can cost anywhere between $1,292-$4,795, and the fees associated with the hook up from the city can cost anywhere between $500-$20,000 depending on where you live.

The cost may make the project seem unattainable, but Joe Reichert, a top real estate agent in Martinez, CA, has worked with homeowners who tried to tackle the cost with their neighborhood.

“The cost of installing a sewer line down the street would’ve been astronomical,” recalls Martinez, who’s sold 69% more single-family homes than the average agent in his area. “They could’ve gotten everybody on the block to go in on it or take out a bond that they paid off over time. But, it’s really complicated.”

Ultimately, the plan had too many moving pieces, and the sellers ended up seeking an alternative. But, depending on your relationship with your neighborhood, this might be a viable option.

Replace the septic system, or sell as-is.

With an estimate in hand, and a better understanding of the laws in your area, it’s up to you and your real estate agent to decide how to proceed with the sale. You can pay to replace the septic system and sell your home traditionally, or you can sell your home for cash, as-is.

If you can legally sell your house, here’s what you need to keep in mind.

Selling your house with a failed septic system is possible in some areas, but it will come at a price. Here’s what you’ll need to consider while preparing your home for offers:

Price your house to reflect the failed system.

You’ll need to cut your home’s price pretty drastically to make it compelling for buyers.

Martinez recommends “knowing the cost [of replacement] upfront. That way the buyer knows what they’re getting into. They’re less likely to be scared off by unknowns.”

Having estimates in hand before the house hits the market means your buyer doesn’t have to rush out and get quotes without your deep insights about the property. You know more about your property and can likely provide more information for an accurate estimate.

A proper estimate for buyers should include not only the cost of replacing the system but also the guarantee that there’s enough room on the property to build another system, since it will need to be installed in a different part of the property than the previous tank, and the ground will have to be tested.

You’ll price the home for sale keeping the cost of replacement in mind. The discount should accommodate that expense in full and an additional mark-down to acknowledge the inconvenience for the buyer.

Expect buyer interest to be limited.

Nearly 50% of millennial homebuyers are looking for turnkey properties. For many buyers, the idea of buying a home where they can’t flush the toilets won’t be enticing. Expect many buyers to perceive the failed system as a hassle, even when the property is discounted.

Offer upfront replacement costs.

For some markets, offering a discount probably won’t be enough. You don’t have to fix the system, but you may need to foot the bill for the replacement of the septic tank as an allowance against the sales price of the home.

Don’t have the cash on hand to replace the septic system? It’s unlikely you’ll be able to work with a conventional sale. Many lenders won’t back a loan for a house without a working septic system, and without a plan to replace it. In that case, a seller will have to work with a cash buyer.

Navigate an escrow holdback if the lender requires one.

If the buyer’s timeline doesn’t account for septic replacement, their lender might require an escrow holdback from the seller. That means the seller puts enough money into escrow to replace the septic system for the buyer. Oftentimes, the lender will require 1.5x the estimated cost of repair into escrow to motivate the seller to complete the project. This caveat can vary by state and lender.

A bathroom with a failed septic system.
Source: (Steven Ungermann / Unsplash)

What if my septic system is OK, but not perfect?

Properties with too small septic systems or just OK septic systems are in a different league when it comes to a sale. Homes with septic systems have to be “rated” for a certain number of bedrooms in a home. Over-listing the number of bedrooms of your home can be illegal in some states, since your septic isn’t large enough to handle those many rooms. Similarly, sellers get creative about what’s a bedroom and what’s not when a home reaches the market.

Depending on your state or county, you may have to replace or extend your septic system to be able to legally sell your home. In other instances, you may need to update the listing of your home to reflect “true” bedrooms, which could result in a price cut.

If the septic system on your property isn’t in pristine condition, it’s worth spending on some time on upkeep and maintenance before bringing it to market. Many states require you to disclose the home’s water treatment system including varying degrees of detail. You might be asked to disclose the last date of inspection, its condition, and its date of last pumping.

States that don’t have specific septic disclosure forms typically adhere to “Caveat Emptor,” which requires the seller to disclose anything that jeopardizes the health and safety of the buyer. Even if your state doesn’t require specific disclosure or employ Caveat Emptor, failing to disclose a failed septic system on your property opens you up to a future lawsuit from the buyer.

Get expert advice on how a failing septic system will impact selling your home

If your septic system is barely getting a passing grade or outright failing, call in the experts. If ever there’s a time to consult with a seasoned agent about how to sell your home, it’s when you have a major septic issue. An agent in your area will be familiar with local regulations around septic system standards in property sales and can help you make the best decision for your home.

Header Image Source: (KaliAntye / Shutterstock)