Selling your house as-is can shorten the time it takes to put your property on the market.
No repairs and no home improvements (and no haggling with prospective buyers).
The problem?
Many homeowners aren’t properly educated about selling a home as-is.
They’re unaware of how it works, what they need to be cautious about, and how much they can potentially lose.
This is why many home sellers get taken advantage of.
I’m going to share crucial information about selling your house as-is so this doesn’t happen to you.
And for reference — I’ve listed and sold properties as-is, helped buyers purchase properties that need work, and worked with investors (and companies) who buy homes in their current condition.
Here’s everything you need to know about selling a house as-is.
What does it mean to sell a house as-is?
Selling a house as-is means that you’re selling your home in its current condition — without making any improvements or repairs.
In other words, when you sell as-is, you’re selling your property in its current state, with no promises to make repairs or improvements before the sale.
Potential buyers are aware of this and adjust their offers accordingly.
They consider the costs of necessary repairs and the effort required to make those repairs.
Although buyers can request inspections after an as-is sale is under contract, the general understanding is clear.
They are accepting your property, flaws and all, without expecting you to fix any issues.
How selling a house as-is works
Fundamentally, selling a house as-is aligns closely with the standard process of selling a house.
The main difference?
The expectations set at the onset that the seller won’t be handling any necessary repairs or improvements.
Here’s how the as-is selling process unfolds:
Listing: You list your property as-is, indicating to potential buyers that your home comes with all its charms and challenges. Unlike regular listings, an as-is listing makes it clear that you’re selling the property in its current condition.
Offers: Interested buyers will make offers, often reflecting the as-is status in their proposed purchase price. Most offers include a deposit, which is typically 1-3% of the proposed price and made to the escrow company handling the real estate transaction within 1-3 business days after the offer is accepted.
Inspection: Now, here’s where things get interesting. Even though you’re selling as-is, a buyer can still include contingencies in their offer, including an inspection. It’s their way of gaining a clear understanding of what as-is means in terms of your property’s condition.
Negotiation: Post-inspection, the buyer might renegotiate the deal if their offer was contingent. They could ask for a reduced price or request that certain repairs be made, despite the as-is clause. Here’s where many home sellers get surprised. Just because you’re selling as-is doesn’t mean negotiation is off the table.
Decision Time: If a buyer asks for concessions that you’re unwilling to make, they can opt to walk away during the contingency period, and their deposit will be returned.
So, while the as-is path can offer simplicity when selling a house, it’s not a “get out of negotiation free” card.
That’s why it’s crucial to remain open to dialogue with buyers and always be clear and transparent in your communications.
The pros and cons of selling a house as-is
Selling your home without doing any work might be something you’re still contemplating.
Or maybe you’ve already decided you’re going to list your property as-is.
No matter your situation, understanding the potential benefits and drawbacks can help solidify which route you ultimately take.
Here are the advantages and disadvantages of selling a home as-is.
Advantages of selling a house as-is
There can be substantial benefits to listing your house in its existing state.
Here are the top three:
Save time and effort
An as-is sale circumvents time-consuming home improvements and repairs.
This can reduce your effort when getting your home ready to sell.
The result?
A quicker timeframe to get your home listed.
Financial relief
Making improvements can add up, especially if you’re selling a house that needs repairs.
You’ll save money on out-of-pocket expenses when putting up an as-is home for sale.
Simplified negotiations
Everything can be transparent from the start when listing a house in as-is condition.
This may minimize surprises and negotiations with the buyer, which can result in a smoother path to closing the sale.
Disadvantages of selling a house as-is
While selling a home as-is has its perks, it also has its downsides.
Here are the three primary disadvantages you should consider:
Lower home sale proceeds
Not making necessary repairs or home improvements can leave your wallet skinnier at the closing table.
You’ll lose the “sweat equity” earned by making repairs and upgrades before putting your house on the market.
Limited buyer pool
The condition of your home plays a big role in how many potential buyers are interested in making an offer.
Some buyers, particularly first-time homeowners or those without extra funds to make renovations, can be deterred by properties in “as-is” condition.
Many of those buyers would rather pay a higher sale price for another home that only needs a minimal amount of work (or none).
Difficulty in securing buyer financing
Some lenders won’t approve a mortgage if the house is in really poor condition and/or has serious defects.
So a property being unloaded in a deteriorated state can present a challenge for a buyer to secure financing, which can lead to it taking a longer time to sell.
When to consider selling your house as-is
Still not sure whether you should sell your home as-is?
It might be helpful to know if your selling situation is similar to other homeowners who have sold their properties without making needed improvements.
Based on my experience, here are the top five reasons why home sellers take the as-is route:
Time constraints: If you’re under a tight timeline due to a job relocation or personal circumstances (e.g. selling a house during a divorce), or if you’ve purchased another home and need to sell quickly, an as-is sale can expedite the process. You’ll save time that would have been spent on home improvements and can move the property onto the market swiftly.
Financial limitations: When the cost of essential repairs or renovations is beyond your budget or doesn’t provide a worthwhile return on investment, opting for an as-is sale might be the right choice. Dealing with significant problems such as foundation issues, roof replacement, or original plumbing can be costly. In these situations, it could be more economical to sell as-is and modify your asking price to reflect these issues.
Inherited or investment properties: If you’re selling an inherited house that needs work or is far away, the convenience of an as-is sale can be attractive. These situations often come with unique challenges, such as managing repairs remotely or coordinating with other heirs, making a simplified sales process appealing. Similarly, if you’re selling a rental property, an as-is sale can help you save time and avoid additional expenses.
Distressed sales: During challenging situations such as divorce, bankruptcy, or a looming foreclosure, an as-is sale could be the most feasible solution. It can lead to a quicker sale, providing immediate relief from mortgage payments or helping to resolve legal situations.
Real estate market conditions: If you’re in a hot seller’s market, where homebuyer demand outpaces the number of properties for sale, you might still attract competitive offers despite selling as-is.
Options for selling a home as-is
You have options when selling your house as-is.
Each of these provide their own unique benefits.
But some have consequences that many home sellers are not aware of.
Let’s go through these so that you know which option might be best suited for you.
Sell off market to a real estate investor
“Sell your house without paying real estate commissions!”
That’s the common marketing tagline cash investors use to lure homeowners into selling well below fair market value.
Many real estate investors who buy homes in cash can close in 7-17 days.
So, selling as-is to a cash investor is your best bet if you need to sell very fast.
That’s the benefit.
The downside?
You can easily leave tens of thousands of dollars on the table (sometimes hundreds of thousands for higher-priced homes).
And that’s after considering that you won’t pay agent commissions.
Real estate investors use simple math when determining what they’ll purchase your home for.
It looks like this…
Their estimated resale value – their closing costs when selling (including paying real estate commissions) – their cost to make improvements – their profit margin = the price they’ll pay for your home.
The important part of that equation is their profit margin.
Most investors who are cash buyers shoot for a minimum profit of 15-20% (based on their estimated resale value).
And the experienced investors are conservative with their numbers.
So expect to net the least amount of money if you choose to sell your home as-is to an investor.
Sell to an iBuyer
iBuyers are companies that buy homes in cash.
They buy properties that meet certain criteria (known as their “buy box”) in specific real estate markets.
They’re similar to local cash investors except that they almost never buy a home in really poor condition.
And they operate their business at a much larger scale.
This can allow them to make a slightly better cash offer compared to your typical real estate investor.
But an offer from an iBuyer is almost always going to be much lower than what you could get on the open market.
That’s because they’re banking on making a profit from the equity they get when buying a home as-is.
Although the benefit is that you have a guaranteed offer that can help you sell quickly.
One thing to be aware of if you sell a home as-is to an iBuyer is this…
It’s common for their offer price to change after a seller signs a purchase contract.
This is due to the fact that their offers are contingent upon an inspection or a representative viewing the property.
List it For Sale by Owner (FSBO)
Choosing to list your home on your own when selling as-is allows you to dodge the listing agent’s commission.
However, you’ll typically still need to cover the buyer’s agent’s commission.
So, selling For Sale By Owner can provide some financial savings.
But that’s only if you’re able to sell your home for around the same price as what an agent could get.
And FSBO listings demand a significant investment of time and expertise.
You’ll be shouldering the responsibilities of marketing, negotiating, and handling complex legal paperwork.
In other words, you’ll have an increased obligation when selling on your own.
And that responsibility can elevate the risk of legal disputes with the buyer, especially when selling your property as-is.
That’s why you should weigh the risk vs. reward before choosing the FSBO path for your as-is sale.
Partner with a real estate agent
Want to get the highest price for your home without making repairs and improvements?
You’ll put yourself in the best position to do that if you list with a real estate agent.
This is the most common way of selling as-is.
But the key to netting the best price is knowing how to choose the right realtor when selling.
A local listing agent who is experienced and trustworthy can bring invaluable knowledge and expertise to the table.
This includes setting the right price, marketing, and negotiating.
All three are crucial ingredients to selling a home for more money.
And the right listing agent can also make the as-is selling process much easier (and faster) than you think.
However, there is something you should be aware of when selling your home as-is with a real estate agent (I’ll tell you what this is shortly).
Tips for selling your house as-is
Selling your house as-is doesn’t mean you can’t sell quickly and for a good price.
You can.
But in order to do that, you need to boost its appeal with the right strategy and go into it with your eyes open.
Here are several home selling tips to improve your likelihood of successfully selling as-is.
Get a pre-listing inspection
You can sell a house as-is without an inspection.
But getting your home inspected before selling it in its current condition can be beneficial.
Why?
Because a home inspection will give an as-is buyer more confidence before they submit an offer.
And a buyer who has confidence is less likely to negotiate with you.
Plus, a pre-listing inspection alleviates concerns about the unknowns, which reduces the chances of your buyer backing out of the sale.
But getting a pre-listing inspection does not mean you need to make any repairs.
All you’re doing is providing potential buyers with the key information they want to know before they purchase a home as-is.
Think of it like this…
A transparent report from a third-party inspector adds credibility to your as-is sale and can prevent future disputes.
Plan on selling to a cash investor?
Then you should have an inspector come out before your initial consultation with an investor.
Listing with a real estate agent?
Let them advise you on the ideal time.
Be aware of the agent-investor partnership
Keep a keen eye out for the agent-investor partnership.
Many cash investors work closely with real estate agents to find as-is homes to buy significantly below market value.
iBuyer companies are also known to collaborate with agents using this approach.
The allure for agents is the triple commission: one each for representing the seller and the investor in the as-is sale, plus another when the upgraded property is listed.
To turn a profit, the investor must buy the house significantly below market value, factoring in the costs of repairs and subsequent sale.
Consequently, you, as the as-is seller, will lose a considerable sum — tens, sometimes hundreds of thousands of dollars, and you might not even realize it.
An agent might persuade you that an off-market sale to a cash buyer is your best option.
However, this could be far from the truth, and testing the open market is almost always more beneficial.
The only exception might be if your home is in seriously poor condition with major structural issues.
So be cautious if an agent tells you they have a cash buyer interested in purchasing your as-is, off-market home.
It’s one of the critical things homeowners need to know when selling a house for cash.
Don’t market your home as “as-is”
Selling your home as-is doesn’t require you to publicly advertise it that way.
Attract potential buyers by accentuating the positive aspects of your property.
Highlight unique features, brag about the prime location, or discuss the potential for buyers to add their personal flair.
Your home, despite its as-is status, has selling features, and it’s your job (or your agents) to expose them.
Avoid revealing desperation to sell; it can push you to a disadvantaged position.
Instead, paint an appealing picture of your property.
The goal is to stimulate emotional engagement from potential buyers to increase demand.
Capitalize on its strengths, flaunt its potential, and let the property speak for itself.
You shouldn’t compromise on the excitement your property can generate in the market just because you’ve chosen the as-is route.
Factor “as-is” into your listing price
Putting the right list price on your home is vital, especially when you sell as-is.
You want to avoid overpricing it at all costs.
Here’s why…
Potential buyers are going to compare your home to other homes that have recently sold.
They’ll look at the condition of those homes, compare it to yours, and then factor in the amount of work (and time) that would be needed if they were to buy your house.
You’ll discourage them from wanting to give you an offer if your asking price isn’t realistic.
This can easily make your listing become “stale” (aka “sitting on the market”).
And a stale listing is an open invitation for a buyer to give you a lowball offer.
This is the absolute worst position to be in when selling an as-is home.
Why?
Because it’s almost guaranteed that you’ll end up selling for less than you would have if you had priced it right from the start.
But this doesn’t mean that you need to set the list price lower than it should be.
It just means that you need to put yourself in the shoes of a potential buyer and know what they’ll be thinking when considering your home.
Disclose key information up front
Selling as-is does not mean that you are relieved from certain requirements that come with selling your house.
You still have a duty of disclosure to prospective buyers, no matter the condition of your property.
This information should be provided up front to potential buyers.
Why?
Because it reduces the chances of your as-is sale falling through.
Similar to an inspection report, you’re being fully transparent from the get-go.
And transparency increases trust with homebuyers.
Exactly what you have to disclose when selling a home as-is will change from state to state.
But you will have one primary obligation…
To disclose any fact that could influence potential buyers not to proceed with an offer on your property.
Here are a few examples of what you might want to disclose:
- Structural defects such as cracks in the foundation
- Current or past existence of mold in the home
- Termite damage
- Roof leaks (including stains from prior leaks)
- Plumbing and electrical issues
- Inoperable garage door
- Water damage
- Legal issues such as an encumbrance or lien on the title
- Road noise
- Issues with neighbors
- Close proximity to high-voltage power lines
If you plan on selling with a real estate agent, they’ll provide all of the necessary disclosures and can guide you through the process.
Final thoughts about selling a home as-is
Successfully selling your home as-is doesn’t have to be an uphill battle.
You can secure the highest possible price if you have the right strategy and know what to be aware of.
Partnering with a top local listing agent who has a reputable track record can help you do that.
The important word there is “reputable.”
Too many as-is sellers get taken advantage of, so you need a real estate expert who can be trusted.
You can leverage our expertise (at no cost) to help you find the best local listing agent.
We screen real estate agents in you area to match you with the one best qualified to quickly get you the best as-is price.
