When faced with financial hardships or with an urgent need to move, selling your home ‘as is’ is the first place you will often look because it provides you with fast funds.
To sell your home in this manner can be incredibly appealing, convenient and provides you with a large sum of money in one go, which could hugely eliminate the issues that you brought you to that point in the first place.
However, it is important to consider that selling your home in this way is not always as simple as you may realize and it is well worth considering the potential drawbacks before you commit to doing this.
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What is selling ‘as is’?
Selling your home ‘as is’ can be perceived in several different ways and the reality is that every single case of selling your home in this way is unique and relative to the given situation. But generally speaking, many will consider it to be one of the following, or at the very least combine aspects of one or the other, or maybe even both.
- The stress-free transfer of property where you will pack up your belongings, move them out of the house, leave the key in the door and walk straight out. As simple as that, right?
- Many perceive it to be where you look to quickly sell your haunted house, for fast cash, to an oblivious buyer. After all, it’s not your problem anymore.
Ultimately, reasoning aside, every case is different and every person has their reasons for needing to opt into the ‘as is’ process of selling. At the end of it all, it’s just looking for a fast close on your home.
While this is a convenient and often quick way to ensure you can get hold of a lump sum of money, it has many potential pitfalls which are well worth considering before you commit to doing it. The best thing to do is to get hold of an experienced real estate agent as soon as you can because they are the experts after all. They are there for a reason and they’ll be able to advise you on how to get the most of your home as you go to sell it, maximize your profits and aiding you with a fast, smooth process.
So, all of this bodes the question; is selling fast for a lump sum worth doing, or is it worth investing a little more into your home before you do this?
Defining ‘as is’
Regardless of what we perceive ‘as is’ to mean, there is, in fact, a legal definition of this so it is important to understand how it works under the eyes of the law before you commit to this method of selling.
When you sell a property ‘as is’, you are selling the property to the buyer in its existing condition. You will not make any changes, either structurally or aesthetically to the property and they are committing to purchase it with all of its flaws included.
Due to the legal nature of this type of selling in many states, the buyer will typically be forced to sign some sort of agreement before finalizing a sale. This agreement will typically list all faults with the house, and once the buyer signs it, they are agreeing to take the property in the condition listed in the agreement.
It is a way of protecting both parties because it allows the seller to aid the buyer into detailing any work that the property may require while also ensuring that once an agreement is in place, responsibility for the property has legally shifted and the seller is no longer liable.
It should be noted that within this agreement, if, once the property is inspected it is found that the seller has not disclosed multiple issues then the buyer has the right to back out of the sale.
Why do people sell houses ‘as is’?
People choose to sell their property ‘as is’ for many different reasons and ultimately, it is all relative. What motivates one, does not necessarily motivate another but there is often commonality to be found. Some of the most common reasons include, but are not exclusive to:
- The result of financial and/or emotional distress.
- The seller cannot afford repairs that the property requires or maybe feel that they cannot deal with the stress associated with the repairs that are required, meaning they’re looking to back out fast.
- In cases of foreclosure, selling fast is a way to claim money on properties that a seller may be vulnerable to losing as a result of financial hardship.
- They simply cannot settle or do not feel comfortable in the home and are looking for a quick way out.
Whatever the reason, the seller is essentially committing to allowing their home to be sold below the market value price’ offering a potential steal for prospective buyers.
How to maximise your profits
When you opt to sell your home in this manner you are, in effect, agreeing to lose money on the home which with the right repairs, would be worth considerably more. With this in mind, it is important to try to maximise the profits.
You’re already accepting a loss, so minimising that loss is something that should be considered. Make sure you save money where possible and whatever you do, work with experts. The price has to be right – if you go too low, you’re doing yourself a disservice but going too high means that you risk being unable to attract buyers.
Just be wary of commission too, because the last thing you want is to lose huge chunks of money to the commission on your already reduced sale price.
What are the disadvantages to ‘as is’ selling?
When you choose to sell your home ‘as is’, it comes with its own set of drawbacks that you must ensure you’re willing to compromise on. It isn’t like selling your home through the normal avenues so you have to expect it to come at a price.
- There are common negative preconceptions formed on houses sold in this manner because buyers will normally assume that there must be a good reason for selling so quickly. What is wrong with the home is ultimately the question on everyone’s minds. As a result of this, you have to accept that it will impact the selling price.
- You need to be prepared to lose profit. Even if you complete small pre-sale repairs, you cannot expect to make the same kind of money on your home that you might have received if you’d have gone through more traditional selling avenues.
- Homes that are sold in this way attract a very specific demographic; those who like to invest in property for lower prices, fix them up and sell them for a profit. This accounts for only a small group of those interested in real-estate which means that ultimately, it may take longer than you’d expect to complete a sale.
Tips for selling ‘as is’, including minor improvements
- Try to avoid writing ‘as is’ in your initial listing. This will attract more potential buyers initially.
- Be sure to comply with state laws. Before the home inspection, you must make sure they’re aware that you’re selling ‘as is’. You cannot be dishonest.
- Make sure you’ve informed the potential buyer that there are no negotiations regarding repair work.
- Keeping them informed is vital because unlike with a traditional sale, there is no second round of negotiations. Either they want the property or they don’t.
- There are small, affordable changes that are worth considering when it comes to selling your home. These can improve basic aesthetics, increase curb appeal and signify small, easy-to-fix changes. If your lawn is overgrown, mow it. If your hedges are out of control, trim them down. If the paint on the walls is chipped, a fresh coat of paint can be applied cheap. Low-cost improvements can significantly increase the attractiveness of your property to potential buyers.
What information has to be disclosed?
Transparency is vital to selling a home ‘as is’. By law, you are required to be open and honest with a buyer about the condition of your home before you close a sale. It is both your duty as the seller and estate agencies duty as a third-party to fully disclose any potential problems in the home, regardless of how small they may be.
Honesty is key to ensuring that you do not face legal consequences. Problems that are hidden always find a way of resurfacing further down the line and the last thing that you want is to lose the transaction and face legal consequences. The information that you are obliged to disclose is as follows:
- Evidence of any structural defects.
- The presence of mold.
- Termite damage.
- Leaks in the roof.
- Title dispute, or any other property-specific legal issues.
- Any major electrical/plumbing issues.
- And anything that is vital information regarding the home
Typically, you will be required to fill in a few Sellers Disclosures, which is a legal documents where you will list any of the above issues with the home to the best of your knowledge.
FAQ – Frequently asked questions
Q. Should you fix up your house before selling?
A. It is worth considering small, affordable improvements to your property before you sell because these small changes can make a huge difference to your selling price, which is already lower than you’d like.
Q. Why are houses sold ‘as is’?
A. It is often the case that people sell houses ‘as is’ because they are facing their own personal, financial and emotional hardships and need to find a way to bring in money, as fast as they can.
Q. What does it mean to sell a house ‘as is’?
A. In simple form, it is to sell a house in its literal condition including all structural and aesthetic problems it carries.
Q. How much money can you lose when you sell your house ‘as is’?
A. This is something that differs case-by-case. There is no fixed price of money you can expect to lose because interest is subjective and ultimately a buyer will determine what they pay.