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Pros And Cons Of Selling A House As Is
To sell a house as-is means to put a property on sale in the market in it’s current condition without any repairs or staging being done.
This can seem like the most straight forward way of selling a house without having to spend money on cosmetic repairs and valuable time in managing contractors.
In various circumstances, letting go of a house this way is the best way forward.
Maybe the owner cannot afford to make repairs due to cash flow problems, maybe he don’t have the time to go through every minor detail with staging with a home fluffer, or maybe there is an urgent deadline to meet and there is simply no way to sell the house faster than this way.
There are a lot of maybes.
Saying that, declaring to prospective buyers of an “as is” home does not legally relieve a seller from certain responsibilities.
Disclosure responsibilities of as-is home sellers
The most glaring of such responsibilities is disclosure of material information.
Any home seller is legally required to disclose certain information about a house, especially it concerns health hazards. If anything, it should also be a moral obligation.
The notice that a home contains lead paint on walls or having high radon levels are some such example.
Otherwise, when a seller declares that his home is to be sold as is, it is basically a notice to potential buyers of a caveat emptor status.
This means that buyers need to beware and practice their own caution in inspecting the house as it is.
It does not mean that one can intentionally lie about the absence of defects. It just means that if one is not asked, then there’s no need to volunteer information.
Since the property would be sold in it’s current state without any further improvements made before closing, any defects and issues will ultimately be the problem of the new homeowner.
The onus of ensuring the house is in a satisfactory condition for transaction is passed onto the buyer.
Disclosure requirements can vary state by state. So do check with the local county about these requirements.
However, when such a seller engages the services of a listing agent, then the agent would have certain standards in disclosure to adhere to.
So even though the seller is not obligated to inform a buyer of certain defects, an agent might have to do just that.
Some of which include:
- Building cracks
- Termite infestations
- Piping problems
- Leaking roofs
The implication is that if a home seller has major defects on the property which he wants to leave for a buyer to discover himself, the hiring of an agent might seem like the wrong way to go about it.
Only by selling the house themselves would the whole burden of uncovering major defects be solely left on the shoulders of potential buyers.
Then again, going FSBO have it’s pitfalls. A seller has to make this decision himself.
One of downside is that if you are going about this alone and faces an experienced buyer’s agent, the odds don’t favor you in getting a good deal out of negotiations.
Disadvantages of selling home as is
While there are some major benefits for selling a home as is, like speed and hassle-free, there are also some major drawbacks as well.
Some of which you’d probably know instinctively.
Buyer negotiation leverage
A seller can forget about hitting the same price points of the highest recorded transactions for similar properties sold recently.
Anyone with half a brain would do that.
And he’d make sure that the seller knows about all the expenses he has to spend to spruce up the place.
Let’s also not ignore the fact that when the as is keyword is mentioned in a listing, real estate investors would be knocking on the door.
And they tend to only buy cheap.
Buyer has one less reason to buy
The types of homes that get sold quickest tend to be those that are been worked on specifically for creating a good impression on sellers.
Call it home staging, improvements, or aesthetic enhancements.
It’s no coincidence that the condition of homes that have been improved get the best prices and moves the fastest.
Unless there is something unique about a house’s location, a buyer would find better value from another listing down the street at the same price but in better condition.
This is the same challenge one would face whether it’s in California or Texas.
When home buyers walk into an open house, they fully expect sellers to try to deceive them by undermining defects and damages.
And no matter how beautiful the house has been decorated, buyers tend to feel that it is just a facade to hide the truth behind the new coat of paint.
So imagine how a potential buyer might perceive the reality of a house that is sold as-is.
If the current as-is condition of the house is it’s best representation of itself, then it’s true self might be even more frightening!
Trying to get a good price for a house can be tough enough. Adding on more obstacles like these is almost as good as self-sabotage.
This negative impression of as is houses for sale can be so bad that many buyers might skip a listing just because of this single factor.
This is no exaggeration.
The assumption is that the house would be sold at a “discount” from it’s appraised value.
In this case, a lender might make demands regarding improvements the house must make before approval or disbursement of funds can be done. Or that the buyer has to top of the difference with cash.
Can you sell your house as is?
The simple answer to this question is obviously yes.
This is especially ideal if you need to sell as soon as possible for financial reasons.
But if the reason for you to go this route is to avoid the hassle with making cosmetic changes to the home, consider that spending some time on these things can mean thousands of dollar in extra closing price.
This can come in the form of less resistance from buyer negotiation.
If you are willing to spend that extra few hours to do some basic cosmetic work, here are some tasks that are proven to have the biggest positive impact on fair market value.
- New paint
- Caulking of kitchens and bathrooms
- Improving, repairing or replacing lighting fixtures
If these 3 things are done, there little chance for any house to look like a slump.
A homeowner would be able to enjoy the better surroundings while the house is being sold as is.
If you really need to sell fast and willing to go low, then there are various establishments online who would make a cash offer for a house just by getting a few details about the property.
They would buy houses as is without requiring owners to make any repairs.
But again, do expect them to start with lowball offers.
How to sell a house as is
If despite all of the above factors discussed, which tend to lean toward not going for it, you’d like to go ahead an sell your home as is, then here is the best way to approach it.
While you are not required to voluntarily inform all buyers of all the major and minor defects in the house, you’d want to know the current situation you are in.
This is so that when asked about a particular problems or a specific fixture, you have the most credible information available to respond with.
You don’t want to end up in a situation where you declare that a crack in the wall of the basement is just a cosmetic problem when it’s actually a foundation problem.
At least with a pre-listing inspection report, you have something signed off by a professional to back you up.
Get repair estimates
Even though you are not going to be spending money on repairs at all, it would serve you well to know the estimated costs of repairs which a new home owner would have to spend on.
Not only will this help you decide on a fair asking price, a prospective buyer would appreciate the information provided (should he ask about it).
This is an added value on your part.
And a prospect would feel that you are upfront and trustworthy to deal with.
Anyway, if you find that some repairs, especially those that are cosmetic in nature, are very affordable, consider getting them done.
They can sometimes make a lot of difference in curb appeal.
Home seller are emotionally attached to their homes. So it’s not a surprise to see them overprice their houses.
However, do realize that buyers are not stupid. And can tell an overpriced home most of the time.
Even if they are unable to tell, their agents would.
So do consider the appraised value, market value, and factor in the repair costs which the new owner would have to pay to renovate the place.
After all, you are selling a house as is… which means that buyers are expected to spend their own money on remodeling.
Finally, remember that a great sale is not all about selling.
There are a lot of other factors that makes a deal a good one.
For example, if the buyer wants a slightly lower price but willing to pay for closing, it might be worth it to take the deal.