What Is Selling “As-Is?”
Selling “as-is” means that the property needs repairs or updates and the seller does not want to take on the responsibility of completing them. They intend to sell the home in the present condition and release themselves from any liability to complete repairs or offer credits for repairs.
It’s a what you see is what you get situation. These properties should be considered with caution, but also offer potential investors, contractors, or real estate management companies the opportunity to make a tidy profit.
These types of sales are common for a few different reasons. Some homeowners simply don’t want to deal with the time or expense of repairs. Living in a nonstop construction zone doesn’t interest them.
Some don’t have the money to make the necessary repairs. Others are in a stressful situation and need to sell quickly. In many cases, the property was in probate and the new owners are looking to sell quickly, and don’t have any working knowledge of the property or its problems. In others, the property is a short-sale or a foreclosure being conducted by a bank.
Selling “as-is” can refer to the entire property or specific portions of it, such as appliances, fireplaces, swimming pools, or detached structures such as sheds or apartments. Be sure you carefully examine the terms of any offer or listing.
How Buyers See “As-Is”
As a seller, understanding how an “as-is” designation affects a home’s sale is critical.
When buyers see an “as-is” listing, they immediately assume there’s something wrong with the property, and usually, this assumption is correct to some degree. It doesn’t necessarily mean the home is a tear-down, only that it will need some work.
Still, it will make the sales process a little more difficult, as a large percentage of buyers are owner-occupants and want move-in ready homes. Taking on a project that will require lots of work from the close date forward tends to make buyers suspicious, and for most, the investment isn’t worth the risk.
Be prepared for lowball offers, too. Knowing exactly what is wrong with the property and roughly how much the repairs will cost provides a negotiation point. If the house needs foundation work, new floors, or a whole new kitchen, take this amount off the asking price! It’ll save you a bunch of headaches and negotiation if you ask for a reasonable price from the get-go.
Also, understand the local market and what the neighborhood or city offers. Excellent amenities, such as good schools, access to shopping and dining, or a strong job market help increase the value of a property and can even positively influence the price on a home that needs work.
If you are considering an “as-is” property, get a thorough home inspection from an independent company you have selected yourself. You’ll want to do some research and choose an inspector with a reputation for honesty and in-depth, detailed analysis about what the property needs. Please understand that you will be responsible for making any repairs.
Also, please understand that inspectors are only human, and can’t see the future.
Do your research! Conduct title checks, talk to an attorney, examine the deeds and land records, pay for a pest inspection, and hire a licensed contractor or engineer to evaluate the structural integrity of the home.
It’s a take it or leave it situation, so you want to be prepared. If the seller is a bank, such as in the event of a foreclosure, the bank probably won’t be aware of a home’s complications and therefore won’t be able to disclose them! Finding out as much as possible about a property is key! Invest in inspections, ask the neighbors if they’re aware of any issues, and use your own two eyes.
If you’re planning on financing the home, check with the lender for any requirements. Some lenders want a home appraisal for “as-is” sales and will refuse to lend a penny over what the appraisal says the house is worth. If this is the case, you’ll need cash to cover the difference as the sellers may not agree to make repairs themselves.
Estimate the total cost of your repairs and deduct it from the average selling price of neighboring homes to see if you’re making a good investment. Exceeding this number will create a loss from the very start. Either negotiate the price down or move on.
If you’re selling an “as-is” property, be aware that you are legally responsible for a complete and full disclosure of any problems the home might have. There are some instances where this rule is waived, such as in the case of inheritance, but in most states, it is mandatory to list all the issues you’re aware of. These disclosures include everything from potential structural issues to noisy neighbors! Ask your Realtor for any required specifics, as these vary from state to state.
Full disclosure will also help the home sell faster by narrowing the field of buyers down to only those serious folks in the market for a cheap fixer-upper. Be sure you clearly advertise the sale “as-is.” You won’t waste time with entertaining people that will back out once they realize the home needs a new roof or structural work.
Be sure your paperwork specifies, in writing, the “as-is” terms and that the contract language clearly removes you from liability for any existing or future issues that may arise. Have a Realtor or attorney review the paperwork to ensure that all provisions and clauses are in proper order.
Shortening the contingency period is another tool sellers can use to keep “as-is” transactions from stagnating. The contingency period starts on the day an offer is accepted and allows the buyer time to review the seller’s disclosure packet and order any relevant inspections. If those inspections return results the buyer is unhappy with, they can walk away from the sale.
Whitestone Acquisitions specializes in buying properties “as-is.” Our company has expert insight about our local markets and we strive to offer our customers the best deal possible for their property, closing the sale quickly and efficiently so you can get on with your life!
To start the process, fill out our online questionnaire or give us a call and we’ll fill it out with you over the phone. We will evaluate the property, compare it to neighborhood comps, and contact you with our range offer within 24 hours.
If you’re happy with the range, we’ll schedule a property analyst to visit the location and assess the home. Based on the findings of our analyst, we will contact you within 24 hours with our cash offer.
Upon agreement to the terms and price offer, we will close at your earliest convenience, as soon as the documents are prepared. This can take as little as two or three weeks!
We also are happy to assist with unwanted item removal and will donate serviceable items to local charities.
If you have questions, please visit our FAQ’s page!
If you have a property you’re ready to sell, give us a call at 844-207-8857 or visit our website to fill out the questionnaire!