Throughout the process of selling a home, you can face many challenges. Finding a ready, willing, and able buyer and getting the house through inspections are a few of the many difficulties you might encounter.
But what happens if a homeowner decides to sell their house in “as-is” condition? “How to sell a home as is by owner” is a commonly asked question or searched phrase by sellers on the web. When you are trying to sell a house that has some flaws, selling it in its current condition can appear to be the easiest option. This means the owner selling the house does not have to bother with time-consuming repairs or even bother themselves about the curb appeal of their property.
The majority of home sellers believe that selling a house as is will be practical and stress-free because they won’t need to do any repairs to the home, which is true, but it has its own set of challenges.
In most cases, when a house is sold in “as-is” condition, real estate agents are not involved as such properties are often purchased by real estate investors. Since the buyer’s agent’s commission isn’t paid, the homeowner usually does not lose money despite getting a lower price for their home. In other words, choosing the “for sale by owner” or FSBO route may be the best option in this case. We’ll discuss what a sale by owner means and how you can do it in a stress-free manner in the subsequent sections of this article.
What Does It Mean To Sell A House In “As-Is” Condition
When a home is being sold “as-is”, it means that the buyer will receive the house exactly as it is, with no modifications or repairs.
Normally, most buyers that find a problem with a house, such as a leaky roof, can ask the homeowner to pay for the repair costs or rectify it before closing. The buyer’s decision to buy the house is subject to the repairs being finished first.
But a property marked with the “as-is” designation indicates that the seller won’t make any repairs, and therefore, it is not addressed in the deal.
Having Realistic Expectations About Selling “As-Is”
One crucial thing to remember is that properties advertised “as-is” typically have a lower listing price because the buyer will probably need to spend more money on further repairs after taking possession of the property. Even when no repairs are required, many buyers will try to negotiate the sales price based on the expenditure on basic tasks like a fresh coat of paint.
Why A House May Be Sold As-Is?
Why the seller is selling their house in its current state is a common query from prospective purchasers interested in such properties.
There are several reasons a homeowner could choose to list their house for sale in its current state. Among the most common justifications for a seller to choose to market their house in its current state is:
- Seller lacks funds to carry out required repairs
- Sellers are going through a divorce
- The seller is battling health complications
- Before selling, the seller has no desire to undertake any repairs
Pros Of Selling A House As Is
1. No cost of repair
If you cannot afford the costs of repairs or improvements, selling your house without any modifications might be your only choice. Depending on your local real estate market, anything you can do to prevent this kind of transaction can be the better choice in the long run. But for immediacy, this option might not be too feasible.
2. Less Financial Liability
This is also beneficial for situations where you need to sell your house urgently due to financial needs. Not to forget, you don’t pay for a professional photographer, host an open house, or pay a listing agent, and will be saving money on the costs involved in all those things.
Many real estate investors who flip properties are attracted to homes that bring a speedy sale after just a few repairs. Most investors pay cash, so transactions can be completed in days or weeks. You won’t have to worry about waiting for the ideal buyer to appear.
3. Less stress
Since you aren’t investing your time or money in repairs, the selling process can be much less stressful in this case. Moreover, choose to sell to an investor. You can also avoid the stress involved with paperwork, finding a real estate attorney, a listing agent, or dealing with multiple potential buyers.
4. Instant Access To Capital
If you are in urgent need of cash, selling your property to a home investor may be your only option. Fortunately, homes sold to real estate investors usually attract a cash offer. This means you will get the cash for your property upfront. Not to forget, the home sale process is also quick and hassle-free.
Cons Of Selling A House As Is
1. Lower offers
When it comes to homes being sold in “as-is” condition, prospective buyers usually come with the assumption that you are desperate to sell the house. In addition to that, there will already be some repair requirements at the time of sale. Hence, the offers are made accordingly. In other words, you should have realistic expectations and not expect as much money as may be paid for a similar property.
2. Fewer interested buyers
Your home can be less attractive to purchasers if you opt to sell it as-is. Buyers assume that there must be something wrong with the house, and that drops their interest. It can reduce the number of potential buyers, which would reduce your chances of receiving an offer.
3. Chances of walkaways
Only because a buyer submits an as-is offer does not obligate them to purchase your house. An as-is contract typically provides the buyer with a set length of time to withdraw from the agreement.
They might have a home inspection within this time to determine if the house requires too much work and if there is a need to cancel the contract.
That implies your house can go off the market for several weeks before returning.
Guide To Selling A House In “As-Is” Condition
1. Understand The Shortcomings Of Going The Traditional Way
The most common route to selling a house is to find a real estate agent or realtor and use their services to find potential buyers. In most cases, this is a good way to sell a property. However, when selling a property in “as-is” condition, this route may not be your best option. Instead, a “sale by owner” route may be more suited to you.
This is true for many reasons. For starters, even with the help of a real estate agent, finding a qualified buyer may be difficult if the property’s condition is bad. Moreover, often when potential buyers show interest in such properties, they make unusually low offers, citing the repair costs that they would have to bear, in order to make the home liveable. In fact, in many instances, multiple buyers have been known to come together to lower the final sale price of a house put on sale by the owner. Such buyers get together to send multiple lowballs offers to the owner to bring the listing price down for their profit.
Sure, you should expect a relatively low offer on your property if you cannot make your home market ready. However, when this low payment is combined with the 5%-6% commission paid to the real estate agent and closing costs, your final payout can turn out to be disappointingly low. This is why many sellers choose the “for sale by owner” or FSBO route.
Unfortunately, FSBO sellers face a lot of challenges. As mentioned earlier, many times, buyers come together to try to scam sellers when they find an “as-is” home on sale by the owner. When you are selling FSBO, unable to use the services of an experienced local agent, you should try the services of a reliable real estate investor instead.
2. Find A Real Estate Investor
A real estate investor is the ideal target buyer for home sellers that want to sell their homes “as-is.” The ability to quickly purchase such properties is one of the biggest reasons to choose to sell to investors.
Unlike most regular home buyers, a real estate investor does not purchase a property with the objective of living in it. Instead, they buy the property, undertake the necessary repairs, and either sell it for a higher price or rent it out.
Since buying and selling properties is literally in the job description of a real estate investor, they are able to make the process quick and easy. Most investors offer all cash offers and pay upfront. If you are working with a reliable real estate investor, you can also rest assured that you will get a competitive offer for your property.
Having said that, finding a reliable investor will require a little bit of work. First off, make sure you check out each potential investor online to ascertain their credibility. Legitimate investors will often have a visible online presence supported by positive reviews on unbiased review websites.
3. Do Your Own Research
While you may be selling to a trustworthy and informed investor, it is still important to do your own research. Remember, only you can truly ensure that you are getting a fair price for your property.
It is also important to do your own research because there is a lot of a grey area when it comes to pricing an “as-is” property. Knowing the fair market value of similar properties will provide you with the necessary clarity to demand a fair price for your property.
4. Stand your ground
Contrary to what many people think, you don’t have to accept the very first offer made by the investor of your choice. In fact, regardless of who you are selling to, negotiations are a common practice.
This is another reason supporting the importance of doing your own research. With that, you will know the fair market value of your property and can negotiate with any prospective buyer in an intelligent manner.
5. Request cash
When you are working with a home investor, getting cash up front is a common practice. Any investor that tells you otherwise perhaps does not have your best interests in mind.
Regardless of whether you are selling your home to avoid a financial emergency or for any other reason, it is important to stand your ground about this. Fortunately, this shouldn’t be a point of struggle if you choose a reliable investor like Home Front.
6. Ensure All The Paperwork Is In Order
Most home buyers don’t have the necessary expertise to ensure all the paperwork has been properly completed. Not facing the hassle of paperwork is one of the biggest advantages of working with real estate investors. However, ensuring you are free of all legal liability associated with the property once the sale is still your responsibility. To be absolutely sure of the same, you may seek the help of a real estate attorney.
Once again, if you have found a reliable investor that you can trust, then this step may be unnecessary.
Final thoughts
It is crucial that you understand the procedure and some of the challenges you can encounter if you decide to sell your house in its current state.
You can better prepare yourself for the task of selling a home in as-is condition by reading this guide.
