What Is Selling As Is?
Selling “as is” means that you’re selling your home in its current condition, flaws and all. The buyer understands that you won’t make repairs or negotiate with them for repair credits.
“As is” homes are priced lower than other homes, reflecting the fact that you won’t pour any extra money into repairs. If you connect with the right prospective buyers, your home may sell quickly as they embrace the opportunity to score a deal.
You Still Have to Follow State Disclosure Laws
While selling your home as is may relieve you from making any changes, you still have to follow state disclosure laws.
Most states have specific requirements for what sellers are legally obligated to disclose to buyers. These typically include:
- The presence of lead paint
- Structural problems
- Defects in the plumbing, HVAC, or roof
- A history of flooding or infestation
In some states, as is home sellers may be able to avoid providing the standard disclosures if:
- The home isn’t owner-occupied
- Both parties agree that it’s being sold as is
If you misrepresent your house to the buyer, you could be held liable for recovery of damages based on fraud and deceit claims.
Buyers Could Still Request an Inspection Contingency
When selling as is, it’s important to keep in mind that prospective buyers are still entitled to request an inspection contingency.
Inspection contingencies let the buyer back out of your deal if an inspector turns up something unexpected. This leads to wasted time and a longer sales process, which is why as is home sellers typically seek buyers who are willing to waive their right to these contingencies.
As the seller, you can always decline the prospective buyer’s request for an inspection contingency — but doing so may drive possible buyers away and limit the number of offers you receive.
Should You Sell Your House As Is?
Pros of Selling As Is
Saves Time: When you sell your home as is, you don’t have to worry about waiting weeks or even months for repairs to be made. You can quickly list your home on the market without wasting any time at all.
There’s also a chance that your home may attract buyers who are willing to pay all cash. This will eliminate most of the steps in the closing process and help the transaction move swiftly.
Saves Money on Repairs: Selling your home as is allows you to save money upfront beacuse you don’t have to make any repairs or improvements to your home.
The tradeoff to saving money on repairs is that your home will likely sell far below market value. Cash buyers will typically pay 60 cents on the dollar for homes that sell in “as is” condition.
Cons of Selling As Is
Fewer Offers: Homes selling as is will attract a smaller pool of buyers who are willing to take on the challenges of updating the property.
Most buyers will steer clear of homes selling as is since lenders typically won’t approve mortgages for homes that are fixer-uppers or in extreme disrepair. That might limit your potential buyers to investors, flippers, or “We Buy Houses” companies.
Lower Profits: Homeowners who sell their homes as is will net lower profits than they would in a typical home sale. The listing price you choose will mainly depend on the condition of the house and how much work will need to be done by the buyer to bring it up to standard once sold.
Options for Selling As Is
There are three main ways to sell your home as is:
- Listing on the open market
- Networking with investors or flippers
- Contacting “We Buy Houses” companies
In general, listing on the open market is the best way to get the most value for your home — and with the right real estate agent and market conditions, you may still be able to sell your home quickly.
However, your specific circumstances will determine which path is most advantageous for your home.
Your best option is usually to list your home on the open market — especially if your home meets minimum property requirements.
Minimum property requirements are standards set for homes and buildings by mortgage lenders. They are centered on:
If your home has serious issues, a lender will not extend a mortgage offer. However, if your home meets the requirements, you may be able to draw more potential buyers to your home — leaving the door open for a higher offer.
There are two options available for marketing your home as is:
- Screen potential buyers by stating upfront that you plan to sell as is
- Get the broadest possible cross-section of buyers first — then disclose that you’re selling as is as part of your negotiation process
Being upfront with potential buyers will show you are transparent and honest about your home. It will also help you weed out unserious buyers, because you’re open about the condition of your home from the beginning.
You could even choose to get a pre-inspection report to lay all of your cards on the table. The report, which typically costs $350-500, could alert you to any issues or repairs that will need to be made to the home — which can be especially helpful for investors and flippers.
If you choose not to be transparent about your home’s issues, you could lose out on potential buyers or lose their confidence — especially if they find out they’re unable to take out a loan to buy your property. While it will allow you to attract attention to your home, keeping quiet may cause prospective buyers to back out of the transaction or remove their offer when they find out the truth.
Your best option is to talk to a real estate agent when deciding on marketing practices.
Network With Investors and Flippers
If selling quickly is your number one priority, connecting to investors and flippers is probably the best way to sell a house fast.
If you don’t know any real estate investors in your area, don’t worry! You can use websites like meetup.com to find real estate networking events, both online and in person. It’s always better to meet investors face to face if you can, but you can also network online by checking out their profiles to find their contact information.
However, before you connect with investors, we recommend touching base with a real estate agent. A qualified agent can help you understand current market conditions and how to position and market your home to buyers.
Some agents even specialize in working with investors, so they may be able to connect you with one of their clients.
If you know and understand the market and your situation, you can get multiple investors interested in your property and get them to bid for a higher price.
Conclusion: Don’t Take a Lowball Offer
Even if your home is in poor condition, it’s always worthwhile to explore all your options and get the best possible price.
Don’t feel pressured to take the first offer that comes your way — especially if they are trying to lowball you. Understand your market and establish a floor price you are willing to take. Confirm with a local real estate professional that the numbers you’ve come up with are reasonable, and stick to them. If you are looking to selling a home as is, contact our team at St. Louis Realty Advisors by giving us a call at 314-270-1601.