Homeowners looking to take advantage of the current seller’s market might be eager to list their property. And those looking to save time and money on the sales process might choose to sell their home “as is.”
Selling a home as is means the seller will not make any repairs to the home to close the deal. Basically, what the buyer sees, the buyer gets. However, there are still nuances and legalities to selling a home as is, which will be covered in this article.
Should you sell a house as is?
While selling a home as is has its advantages, it also comes with many disadvantages. On the one hand, you could take a financial loss in the final sale price if your property is outdated or damaged. On the other hand, selling a house as is allows you to avoid the time and cash involved in renovations, especially if you do not have the cash flow to make such renovations.
Read on to learn the pros and cons of selling a house as is and tips for sellers on how to sell a house successfully.
The Basics of Selling a House “As Is”
Typically, if a buyer discovers damage or disrepair in a property, they can make the sale contingent upon fixing such issues. When a home is listed for sale as is, though, it means that the homeowner is selling the home in its current condition and will not make any improvements before the sale. Traditionally, it also means they will not negotiate with the buyer to provide any credits toward home warranties.
Sellers choose this route for several reasons. Either they do not have the funds to fix the property’s flaws; the home has gone through a foreclosure and is now owned by a bank, or the property belongs to someone who passed away, and the house’s inheritors want to sell it quickly.
These homes are typically not move-in ready, and many fixer-uppers are sold as is. Note, though, that selling a home as is does not change the legal rights of the seller and buyer. The seller will still have to disclose known problems, and the buyer is still allowed to make their final offer contingent upon certain results in a real estate inspection.
Pros of Selling a House as Is
1. Save Time
Many buyers who purchase fixer-uppers pay in cash, which significantly speeds up the closing process. You also won’t have to wait for renovations to finish before listing your home.
2. No Repair Costs
Repairs can get incredibly pricey, with some renovations costing up to $150 per square foot. Selling a home as is allows owners to avoid going into debt to sell their house.
3. Simpler Selling Process
Selling a house as is means the owner will not need to prepare the home for sale in the traditional sense with home staging, open houses, repairs, etc. This no-frills selling method can make the overall process much easier.
Cons of Selling a House as Is
1. Lower Sale Price
The biggest downside to selling a home as is that you won’t get its full market value. In 2019, buyers paid slightly more than $250,000 for move-in ready homes on average and slightly under $200,000 for fixer-uppers. The severity and pervasiveness of the damage to your home will determine how big of a hit you’ll take in losses.
2. Fewer Offers
The number of repairs a home requires might scare off some buyers, and some lenders won’t even approve mortgages on fixer-uppers. Your potential buyers may end up being limited to investors and house-flippers, depending on what shape the property is in.
Experienced investors and house-flippers are used to negotiating and will often start with a low-ball offer. Sellers will have to keep their negotiating skills sharp when dealing with these types of buyers. That’s why having a real estate agent in your corner can be extremely useful.
How To Sell Your House as Is
Use a Real Estate Agent
A real estate agent is a home seller’s greatest tool in their arsenal. A good realtor will help you list the home, give you insights into trends in your neighborhood, and help you set a reasonable price that will attract buyers. You can expect to pay anywhere between 5% to 6% of the home’s final sale price for an agent's time and services.
Sellers looking to save money on agent commission fees can use a discount broker such as Clever Real Estate, which charges a flat fee for their services instead of percentage-based commission and negotiates better rates for their clients with top local real estate agents. Clever offers a full-service sales experience for a flat fee of $3,000 or 1% if your home sells for more than $350,000.
Although potential buyers are not expecting a home that’s being sold “as is” to look spectacular, making sure common areas are decluttered will improve your chances of attracting offers.
Things such as maintaining the lawn, cleaning surfaces, making the beds, washing the dishes, and tidying shared spaces can make a world of difference. Remember, the property may already look battered, which will make buyers wary, so any steps you can take (especially ones you can take for free) to improve the space will be a gesture in the right direction.
Do a Home Inspection Before Listing
Home inspections are done to evaluate a property's condition and what type of maintenance or repairs it may need. When selling a home “as is,” the home inspection is an incredibly important step if sellers are to be compliant with their local and state disclosure laws.
Home inspections usually cost between $300 to $450, which is significantly cheaper than the cost of getting sued by a buyer for not disclosing a property’s defects. Providing buyers with a full home inspection report will prove you have nothing to hide and can help you sell your home faster.
Your real estate agent will also help you navigate your local disclosure requirements, so don’t get too overwhelmed by the thought of flipping through local property laws.
Make Sure Your Property Meets the Bare Minimum for Lenders
If you are trying to sell your house to buyers who are using a lender, you will have to make sure your house is at least up to code; otherwise, banks may find it “non-lendable.”
Items that will need to be repaired or replaced for a bank to generate a loan for your buyer will be things that make a house “livable” or “habitable.” For example:
- Foundation damage
- A leaky or damaged roof
- Electrical issues
- Mold problems
- Water supply issues
If you choose not to make necessary repairs based on your home inspection results, then banks likely won’t lend to your buyer. This will leave you with home flippers and investors to sell to, who will likely want a hefty discount.
Don’t Sell Yourself Short.
Before going into negotiations, set the absolute minimum you're willing to sell your home for. This will make it easier to propose counteroffers or walk away from offers that don’t meet your goals.
However, you need to make sure that your price is reasonable or else you'll risk buyers not even entertaining the thought of purchasing your home. Your real estate agent will help you set a price and stick to your numbers through the negotiation process.
Ready To Sell Your House as Is?
Selling a house as is can save you a lot of time and money, but it's not always the right decision, as you might receive fewer offers and sell your home for a lower price than you'd like.
However, if you decide to sell your house “as is” is right for you, Clever Real Estate is here to help. Clever can connect you with thousands of top-rated local agents in your area today and offers their services for a flat fee of $3,000 or just 1%. Visit listwithclever.com to list your property “as is” today.