- What does selling a home as-is mean?
- Reasons for Selling As-Is
- Drawbacks of an As-is Sale
- How do you sell a house as-is?
- You Can Sell a House As-Is and Still Make Repairs
- Find a Real Estate Agent Who Specializes in As-Is Properties
Selling a House As-Is: What You Need to Know
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Most homeowners take on a hefty task list before they sell their homes. They sort through items to declutter while giving up nights and weekends to make repairs and improvements to the property. Bushes are pruned to increase curb appeal while rooms are repainted to more neutral colors that appeal to buyers. Make no mistake, home sale prep can be exhausting.
But what if you skipped all of these tedious chores? What if instead of making repairs to sell your house, you just marketed it in its current condition? This is what happens when you sell a house as-is, and it’s a more common practice than you think.
Here are the pros, cons, and general logistics of selling a house as-is. Learn more about this option to see if it’s right for you.
What does selling a home as-is mean?
There are plenty of complicated terms in real estate, but this one is fairly straightforward. Selling as-is means listing it in its current condition. The buyer cannot expect the seller to make any repairs to the home before closing unless they agree to repair contingencies in the initial offer or after the inspection. The buyer knows that when they close on an as-is house, all of the flaws and issues come with the deal.
An as-is purchase is not a blind purchase. It does not mean the buyer closes on a home sight unseen and discovers its various flaws later. Sellers are still required to disclose any known issues with the house and prospective buyers are able to request an inspection as part of the home sale contingencies.
For example, a seller might know the roof needs to be replaced. Rather than spending money to replace the roof, the seller would list the house as-is with an explanation that the house needs a new roof. (A home inspector would confirm this.) The price would also be adjusted to reflect the repair needs. A $500,000 house that needs a new roof could be listed at $485,000 as-is.
Selling as-is isn’t necessarily a bad thing. It simply highlights an unwillingness by the seller to make repairs.
Reasons for Selling As-Is
Every real estate transaction is unique and sellers come from a variety of backgrounds and abilities. There are several reasons why a property would be listed as-is – and it isn’t necessarily because the home is in poor condition.
The Owner Wants to Sell the House Fast
Homeowners who want to sell their homes fast might be willing to accept a lower price for an as-is sale. They might not have time to make repairs to sell the house in its best state. A few reasons why a seller might be in a hurry include:
- They are relocating for a job with a set start date.
- The owners who lived there are going through a divorce.
- A relative inherited the property and they want to liquidate the estate.
- The house is at risk of falling into foreclosure.
These factors can actually benefit buyers who might get a deal on a property from a highly-motivated seller.
They Don’t Want to Spend Money on Repairs
Preparing a home for sale is expensive. The average homeowner will spend $15,000 to prepare a home for sale. Some homeowners will spend between $5,000 to $50,000 to make their homes more appealing to buyers. While sellers hope to earn back the money they put into these improvements by listing the house at a higher price, a complete return on investment (ROI) is never guaranteed.
Some homeowners can’t afford to renovate a house before selling it or they don’t have the time to make the repairs before they need to move.
Some Markets Favor As-Is Sales
In a competitive seller’s market, homeowners don’t have to make their homes appealing to buyers. This was the case for the 2021 and 2022 housing markets. During the pandemic, people stopped selling their houses because staying home seemed safer than moving and potentially catching Covid-19. As a result, home sellers who did list their properties enjoyed above-listing bids and often had buyers engaging in bidding wars to fight for their homes.
Sellers living in areas where they knew their houses would receive offers within a day or two of listing didn’t see as much of a need to make any improvements before their properties hit the market.
When the real estate market shifts and buyers have a greater supply of homes to choose from, sellers will have to make renovations before listing their homes. Buyers could walk away from properties that need repairs because there are better turnkey options down the street.
Drawbacks of an As-is Sale
While selling a house as-is can be easier than making repairs and upgrades, there are some drawbacks to this option. Here are a few reasons why this might not be the best way to list your home.
As-is Homes Can Deter Buyers
Some buyers think the “as-is” label is a warning. They worry that there might be something seriously wrong with the house that the seller is hiding. Legally, home sellers cannot hide problems from buyers. They need to issue a property disclosure statement to potential buyers.
Listing your home as-is could also deter potential buyers that don’t have a large renovation budget. If a buyer puts most of their savings into a down payment, they might not have the resources to replace the roof or upgrade the HVAC system immediately after the closing date.
The As-is Condition Could Lower Your Market Value
A poor-quality house fetches a lower market value than one that doesn’t need any improvements. Be ready to accept a lower price, but also make sure you have a minimum amount you are willing to accept. You don’t want to lose money on the sale because of lowball offers.
Mortgage Companies May Slow the Sale
If your buyer needs financing to purchase the house, the home sale process could take longer if you are selling as-is. The lender wants to make sure the sale is fair and the investment is structurally sound. Some banks might not approve loans on houses that need extensive repairs. This means your speedy as-is home sale could take longer than expected because of lenders.
If you are listing your house as-is, consider looking for cash buyers. A cash buyer won’t have to work with lenders and can provide proof of funds showing they can afford the house and the repairs.
How do you sell a house as-is?
If you decide that an as-is home sale is right for you, there are a few steps you need to take to meet real estate transparency and ethics guidelines. Your Realtor needs to know that you plan to list the house as-is and they can guide you through the disclosure process. Here is what you need to do.
- Hire a local real estate agent to sell your home. Tell them you are selling as-is and to market the property appropriately.
- Your agent will evaluate the house and ask you about its condition. Some questions they may have are the age of the water heater, if you plan to take the refrigerator with you, and the condition of the roof.
- The Realtor may recommend getting a pre-listing home inspection. This allows you both to thoroughly understand the state of the house.
- The Realtor will provide a fair price for the home’s value. They will conduct a market analysis and deduct value for repairs that need to be made.
- The house will hit the market as an as-is property. Buyers and buyers’ agents will know what needs to be repaired within the house before they see it.
During the home sale process, keep the house as clean as possible. This will make it look appealing to buyers and may help them overcome any concerns about the as-is label. By being transparent about the house’s issues, you will attract prospective buyers who are aware of the situation.
You Can Sell a House As-Is and Still Make Repairs
It’s a common misconception that as-is properties need a lot of repairs. The reality is that many homeowners take time to prepare a home for sale but can’t make all of the necessary improvements.
For example, a homeowner might have to choose between replacing an air conditioning system and putting in a new water heater They will market the house as having brand new AC but will list the property as-is because of the heating tank.
If you are considering selling your house as-is because of a key issue, you can still spend time making repairs. In fact, the better the condition of your home, the more appealing it will be despite the as-is label.
Find a Real Estate Agent Who Specializes in As-Is Properties
A quality Realtor will have worked with as-is home sellers before and will know how to market your home in its best light. They will know how to list your property competitively while still setting reasonable prices for the sale. They can also answer all your questions so you feel confident accepting offers.
Quality Realtors can be hard to find, which is where our team at FastExpert comes in. All you have to do is enter your city and zip code and we can recommend top agents in your area. These pre-vetted Realtors have a proven track record of success and are ready to help you. Hiring a FastExpert agent is free and you are not obligated to choose any agents we recommend.
Learn more about FastExpert today and take the first steps to list your home as-is.