You can probably think of several reasons why a homeowner would consider marketing a home with problems in “as-is” condition. The most obvious of course, is there’s no money to perform the required work. Frequently this happens in probate sales where the heirs inherit a home in need of work but lack the funds to put the home in market condition. And folks who need to relocate quickly for a new job, often just want the house off their hands so they can move on with their lives.
Although we understand why someone may need to sell a home as-is, I believe our clients need to know the possible ramifications of doing so. Let’s take a look at two reasons you might want to reconsider your decision to sell your home “as-is,” and what to do if you absolutely must.
1.You’ll have fewer qualified buyers if you sell as-is
When your home is advertised as a fixer, which is what most as-is listings are, you’ll partially drain the pool of buyers who can buy your home. For instance, since FHA-backed mortgages require certain repairs be made before they’ll ok a loan, your buyer pool won’t contain many first-time buyers.
Then, those who are getting a conventional loan may be getting out of the pool as well since many conventional lenders balk at lending money for a home that needs significant work. Many conventional lenders will insist certain items, such as a roof in need of replacement, be taken care of before closing.
Then, there’s the fact most buyers just don’t have the money to repair a home after moving in. Although your low price will attract the tight-budget buyer, the reality of the financial outlays after closing may prevent them from proceeding with a purchase.
Your buyer pool now contains mainly cash buyers and most cash buyers are investors – the most real estate savvy homebuyers. They’re out for a bargain and if you hope to sell your home at all, you may end up taking an offer for far less money than you’d imagined.
2.You won’t make as much as you hope
Today’s homebuyers say they want a home they can move right into, stick their toothbrush in the holder in the bathroom and enjoy their new digs. So why would a buyer want your home? When you consider this question, there can be only one answer: A buyer would want your as-is home because it’s cheap.
Depending on the extent of needed repairs, you’ll have to list your home for less than nearby homes in better condition. As mentioned earlier, a low listing price will bring out investors and everyone else looking for a bargain. Be prepared to get beat up over your price, regardless of how low it is, and to sell for less than you’d hoped.
It’s quite possible it may be more cost-effective in the long run to make the necessary repairs so you can list at a higher price.
If you must sell as-is
I understand certain home repairs may be financially out of the question for some sellers and they simply must sell the home in its current condition. Here are 3 tips to help:
Stage the home
Appearance matters more in real estate than most other industries. With attention to increasing the home’s curb appeal and some fresh paint and a good scrubbing inside, even the worst home will look better.
Most buyers will decide whether or not to view your home while shopping online, so paying attention to cosmetics makes for compelling listing photos. Sure, they’ll know something’s wrong with the home (“as-is” advertises that), but if it looks ok, the perception will be whatever is wrong with it can’t be that bad. Getting more people to view the home in person is the name of the game when it comes to selling quickly and for more money.
Last year I had a listing that was in really rough shape. A partially gutted bathroom, kitchen the size of a walk-in closet and some nasty carpeting. Having been a professioinal photographer for 17 years I take my own listing photos. Several Realtors who showed the home said their clients commented that the pictures didn’t really show the true condition of the home.;-) The point of listing photos is to get potential buyers in the door. Retouching or editing to cover up existing conditions would be unethical – but proper use of lighting and camera angles is not.
Consider a pre-sale home inspection
Sure, you have a good idea of what’s wrong with the home, but there may be more, or less, than you imagine. A pre-sale home inspection will give you the definitive answers you need and will go a long way in showing potential buyers that you’re earnest in your desire to be completely honest about the home’s condition.
Plus, if you supply the buyer with the inspection results before accepting the offer, you’ll be able to weed out those that will eventually back out, after they have their own home inspection.
Disclose Disclose Disclose
Protect yourself by disclosing all known issues concerning the home and the neighborhood. Yes, it feels as if you’re betraying yourself, but disclosure is important if you want to avoid running afoul of the law and winding up in court. Disclose Every. Last. Thing.
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