The home-selling process can be challenging at times. This is especially true if home sellers are trying to move quickly or are hoping to avoid costly renovations. That’s why homeowners sometimes choose to sell and advertise their houses as is.
Selling a House As Is
Selling a house as-is means the homeowner will not make repairs or renovations before selling it to a buyer, even if the home has structural concerns or is in poor condition. If you’re considering selling a home as is, you can expect a couple of nice perks, yet there could be a few limitations you’ll want to be aware of.
The following article will break down the pros and cons of selling your house in its current condition and provide other helpful insights for an as-is home sale or purchase.
The Benefits of Selling a House As Is
First, let’s go over some reasons why you might opt to sell your house as is.
If you want to get more equity from your home without putting in a ton of effort, it's possible to just sell it as is. Home-buying companies may be eager to take a home off your hands. Other cash buyers, like investors, may also be ready to buy your house quickly. Especially in a seller’s market, you will likely be able to sell successfully.
Save money on home improvements
When you sell your house more traditionally, you want to get the most money from your sale by fixing up your home. You may also be required to make repairs to meet certain state standards in order to sell your home. Buyers will have an inspection done and the cost of some repairs or updates, especially those regarding safety, often falls to the seller. Selling as is means you can usually avoid those possibly expensive repairs.
Attract home rehabbers and house flippers
A lot of buyers want to make renovations and changes based on their own preferences and may actually prefer paying a bit less for an as-is home.
Less hassle and negotiating
A home inspection that uncovers a lot of issues can cost a decent amount of money upfront. While the seller isn’t necessarily required to make all renovations or repairs, the buyer and seller must negotiate who will pay for what in a typical sale. If you don’t want to spend the time and money tackling those projects, it may be harder to sell your house at your previous purchase price. By selling the home as is, you won’t have to do as much negotiating with a buyer or agent, at least in terms of home upgrades and repairs.
The Cons of Selling an As-Is Home
Selling a home as is can be a great option for some people, but selling your home like this also has its challenges.
Make less money off the sale
Usually, you will make less money selling your home as is than listing it traditionally.
Since as-is homes often need repairs the owner wants to avoid paying for, these home listings are more likely to attract buyers looking for a deal. Unfortunately, even if your home is in excellent condition, people will expect you to sell an as-is home at a lower price.
Fewer buyers available
Marketing an as-is home can be more challenging, plus many lenders require the home to meet certain living conditions.
If a home needs a lot of work and the seller isn’t going to contribute to the cost of fixing it up, fewer buyers will be able to afford a mortgage for such a house. Not to mention, a less-than-ideal home may look worn, which can make buyers uninterested.
Buyers don’t want the hassle of hiring contractors
Buyers may not want to hire contractors to assess the home and estimate a fair purchase price.
Buyers may already be hesitant about taking on a project and feel the cost of hiring contractors isn't worth it. That being said, sellers are still legally and ethically obligated to disclose major issues to buyers, which can lower the home's value.
Alternatives to Selling a House As Is
If selling your house as is isn’t right for you, there are a few viable alternatives to consider:
- Update and repair. Invest some money and time to fix and update your home. With a few repairs and renovations, you may be able to command a higher price than selling as is.
- Rent your home out. If you don’t need to sell your home for a down payment on your next home, you may be able to rent it out. This may be an especially practical option if you live in a tourist area, college town, business district or other strong rental market location.
Tips for Selling a House As Is
If you’re ready to sell your house as is, here are some tips to help with the process.
Know the Type of Buyer You Want To Attract
There will be a big difference between your average buyer seeking a home to live in and an investor looking to flip your house. Investors specifically go after as-is homes and have the upfront cash needed to buy your home, so your house doesn’t need to meet too many conditions to be competitive.
Conversely, someone in the market for a home to live in will have much different expectations. While they won't expect you to fix your home, they will expect to pay less for your home than it would typically go for. Keep in mind that even if a buyer is seeking an as-is home, they will still likely hesitate to make an offer on homes that have too many major issues.
Consider the Condition of Your Home
Like with a more traditional sale, your home will still have an appraisal and an inspection, affecting the purchase price.
If your home is in moderately good condition and still livable, your house could be an optimal option for more typical homebuyers. If your house will be a big reno project, you should target investors to get the most money off the sale.
Sell in the Right Market
A seller’s market — when there’s more home demand than supply — is the best time to sell your home as is. You can sell your home for a more competitive rate because, despite the extra cost, buyers may be more willing to fix up a home than not move into a new home at all. The market conditions will always affect how much you lose by selling a house as is.
Emphasize Other Property Selling Points
For most buyers, money is a significant factor in selecting a home — and a home with lots of repairs and renovations means lots of extra expenses. However, some as-is homes may have other desirable traits that make the purchase worthwhile. For example, location is of primary importance for a lot of people. If you have a home in a highly sought-after neighborhood, there’s a better chance that you’ll be able to sell your house as is.
The Bottom Line: How Much Money Can You Lose Selling a House As Is?
You usually won’t make the same kind of money selling your home as is as you would selling it the traditional way. While there’s no one answer to this question, most sellers can expect to get between 75% and 95% of their home value.
Tips If You Are Looking To Buy a House As Is
If you are considering buying an as-is home, here are some tips to keep in mind.
Plan for a Home Inspection
You should always get a home inspection if you're seriously considering buying. This is especially essential for as-is homes.
Sellers shouldn’t hide issues with their homes, but they may not always be forthcoming or even be aware of certain problems. A home inspection lets you know what you’re working with so you don’t invest all of your time and resources into a never-ending money pit.
Know the Required Home Inspection Standards for Lenders
If you’re like most people, you don’t have hundreds of thousands of dollars in cash to splurge on a house, which means you'll need a mortgage loan to purchase a home, even a fixer-upper. Make sure you can afford the necessary repairs to your prospective home; otherwise, the home may not qualify for a mortgage loan.
Rely on Experts
A good real estate agent will help you navigate and negotiate buying a home as is. Sellers have every right to sell their home exactly as it is, but they are also legally required to disclose details about their home, including the challenges. As a local expert, your agent should know the market conditions and can help you determine whether or not you should commit to an as-is home.
Also note that if a lender won’t loan you a certain amount of money for a home, that indicates the property isn’t suitable for living in and may not be worth your efforts and time unless fixed.
What Does Market Condition Mean?
Market conditions are the factors that influence the value of your home depending on the area. This includes the cost of living, mortgage rates, supply and demand, demographics and the overall economic status of the housing market.
For example, let’s say employment levels are high and a larger percentage of the population has steady employment and income. If this is the case, it’s also likelier that people are in the market to buy a home because they can afford it. This means the price of housing will usually go up. The opposite is generally true, too — if unemployment is high and people aren’t buying homes, the cost of homes will go down.
Depending on the market condition of your area, you may or may not be able to easily sell your home. If housing is competitive and favors the seller, then the market conditions will favor an as-is home sale. If the cost of homes is low, then buyers would benefit from purchasing a turn-key home if they can afford it rather than taking on an as-is home with projects.
What To Know About the “As-Is Condition” Clause
Sellers of as-is homes are responsible for revealing known problems with the property. An "As-Is Condition" clause is part of the real estate contract that protects the seller from liability should the buyer discover unknown or other defects with the home after purchasing it.
The as-is clause explains that the buyer is willing to accept the home in its current condition and agrees to forego requesting the seller to make repairs or a price reduction based on property problems. However, the as-is clause does not relieve a seller from liability should it be found that the seller intentionally misrepresented a defect or did not disclose a known problem.
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