Ask any real estate agent or housing market expert, and you'll often hear that a home that's updated is more likely to sell quickly, and for top dollar, than a home that's sold without any effort to improve it. The latter option is known as an as-is sale, and there are benefits and drawbacks to going this route.
What does selling a house "as is" mean?
When you sell a house as is, it means that you're putting it on the market in its current state and that you won't be making any updates or repairs to that home once you have a buyer. In other words, anyone who purchases your home will understand that its sale price is based on the condition of the home and that any changes are the buyer's financial responsibility.
It's common for homes that are in foreclosure or being sold via a short sale to be put on the market as is. But even if your home doesn't fall into these categories, it could still make sense to sell your house as is.
When does it pay to sell a house as is?
As a seller, there are some situations where it could pay to sell your home as is rather than make updates prior to putting it on the market.
1. You don't have the money for updates
It costs money to get a home into better shape. If money is tight, then you may have no choice but to sell your house as is.
Of course, before you go that route, it could pay to explore your options for financing renovations affordably. For example, you may be able to refinance your mortgage with a cash-out option that allows you to retain extra money for home updates, but there are closing costs you'll need to absorb when you go this route, and those costs alone could be a deal-breaker. Similarly, you could try taking out a second mortgage (for example, a home equity loan or line of credit) to finance your improvements, but again, you're borrowing money that you'll need to pay back.
2. You know there's limited inventory on the market
When there's lots of competition on the local real estate market, then you may not manage to get away with selling your home as is, even if you price it accordingly. But if your home is one of just a few available in a real estate market with limited inventory, then a buyer may be willing to agree to the terms of your sale.
3. Your home has unique selling features
You may not be motivated to make improvements or repairs before you sell your house if it already has a few key features that are apt to appeal to buyers. For example, if you live in a neighborhood where 99% of the homes don't have a basement and your home has a basement, then that alone could be a key selling point. As such, it may not matter to a buyer that your basement needs work or that other aspects of your home, like its outdated kitchen, aren't up to snuff.
4. You're planning to price your home competitively
If you're hoping to get top dollar for your home, then selling it as is may not work out so well for you. But if you're eager to get your home sold quickly and you're willing to come down on your asking price to attract a prospective buyer, then an as-is sale could work out just fine.
What are the benefits and drawbacks of selling a home as is?
Selling your home as is could work out in your favor. For one thing, it could allow you to list it quickly, and that's important if you're in a rush to get out. If you can no longer afford your home and need to unload your mortgage as soon as possible, or if you need to relocate for work or another purpose, then it's faster to find a real estate agent and put your home on the market in its current condition rather than spend weeks or months fixing it up before listing it.
Also, selling a house as is means not spending -- and wasting -- money on updates or repairs. Not every renovation will result in more money when you sell your home, so this way, you won't make improvements or repairs you'll regret after the fact.
On the other hand, selling a home as is has its drawbacks. First, you might struggle to find a buyer if your home is showing visible signs of wear and tear, has poor curb appeal, or has obvious costly repairs that have not been addressed, like roof or termite damage. Also, when you put your home up for sale as is, there's a negative connotation involved -- one that even the savviest real estate agent might struggle to overcome.
Furthermore, when you sell a house as is, you'll need to come down on your asking price -- quite substantially in some cases. Also, there's still the potential for a buyer to back out of the deal when you sell a home as is. Most real estate contracts come with a home inspection contingency which states that if an inspection reveals a major flaw, the buyer has the right to withdraw an offer without financial penalty. If your home is really in bad shape, you could lose buyers by virtue of not making a necessary repair or two.
Should you sell your home as is?
Selling your house as is may be appealing if you're eager to complete the sale quickly and you don't want to deal with the hassle of sinking money into renovations. But before you decide to go that route, ask yourself whether a few minor repairs might get you a higher asking price. If so, then it could pay to spend a modest amount of time, and money, fixing up your house before putting it on the real estate market.
On the other hand, if your home needs extensive repairs that you're not in a financial position to make, then you may need to list it as is, even if that means walking away with a lower asking price than you'd like.
One thing you may want to do before making your decision is consult with your real estate agent. Depending on the housing market you're in, listing your home as is may work out just fine, but if there's a lot of competition and you need to sell at a certain price to cover your remaining mortgage balance, then you may need to put some amount of work into your home before asking buyers to make an offer.
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