Preparing a home for sale can be stressful — especially if you’ve been putting off necessary repairs. Instead of taking on that burden, selling a house as-is can be an attractive option for sellers looking to alleviate the responsibilities and costs associated with selling a house.
— What does selling a house as-is mean?
— How much do you lose selling a house as-is?
— Selling a house as-is
— Who is more likely to buy a house as-is?
— Cons to selling a house as-is
[What Happens to the Money You Make When You Sell Your House?]
What Does Selling a House As-Is Mean?
Selling a house “as-is” essentially means selling a home in its current condition. “When buyers purchase a home as-is, they are doing so knowing that they cannot request the seller make any repairs based on what is found during the inspection process,” says Beatrice de Jong, a real estate broker in Los Angeles.
Selling a house as-is can also mean a lot of things to different people. Does it mean the house needs some cosmetic repairs or does the entire roof need to be replaced? For some, it may seem like a bargain, but it could mean hidden issues that could cost thousands of dollars to repair, even with sellers required to meet minimum state and federal disclosure standards. For as-is sellers, it could mean a lower selling price and fewer interested buyers.
“Keep in mind, when selling a home, first impressions matter. The condition of your home will (impact) how much money you will be able to walk away with,” de Jong says.
How Much Do You Lose Selling a House As-Is?
The amount a seller could potentially lose on an as-is sale has a lot to do with the location, the condition of the house and the current state of the market. “I’m seeing properties that are in need of tons of work selling at premiums just because of the environment we’re in,” says Jeb Smith, broker associate with Real Broker in Huntington Beach, California. “If we’re talking about now versus other markets, it’s a different answer.”
Smith explains that when the market was balanced or in favor of buyers, properties in need of some work could sell at 15% to 20% below market value. Not only can selling as-is take a chunk out of the sales price, but it could also mean that the house sits on the market for a longer period of time. Carrying costs, like mortgage payments, homeowners association fees, utilities and more, could cut into a seller’s profits.
Selling to investors could also impact the final offer. “If an investor wants to fix it up and flip it, they need to get that property at a price that allows them to do the upgrades and still make a certain profit on that property,” Smith says. Investors have their own risk tolerance and profit margins, which may impact how much they offer.
[READ: How Long Does It Take to Sell a House?]
Selling a House As-Is
Homeowners planning to sell their house as-is still have the upper hand in this seller’s market. “I wouldn’t say every single transaction, but a good majority of properties are selling as-is because sellers have control at the moment,” Smith says. “They have the leverage, therefore they’re dictating the process in which properties sell.”
Surging demand and lack of options have put sellers in a position of power. In August 2024, existing home sales totaled 3.86 million homes on a seasonally adjusted annual rate. In 2021, during the home-buying boom, 6.12 million homes were sold. Even though home sales have slowed, many markets remain competitive and housing inventory remains tight. It’s still a seller’s market, although prices have started to adjust.
“You don’t have to do a lot to sell your property as-is in this market. Now, when the market turns, which eventually it will at some point, it’ll either be more balanced or geared toward buyers. That’s when sellers have to focus on what’s going to set them apart from the house down the street that either doesn’t need any work or the sellers are willing to do repairs,” Smith says.
Who Is More Likely to Buy a House As-Is?
Any buyer is capable of purchasing a home as-is and for a variety of reasons.
“Many first-time buyers looking to break into the market on a budget often will purchase homes as-is,” says de Jong. “Being able to buy a home in need of cosmetic fixes enables buyers to get into the real estate market and remodel a house in their style.”
There are also investors, house flippers and companies that purchase homes as-is. For example, de Jong notes that Opendoor, a large real estate company known for making cash offers on homes, will make an assessment on a home to verify its condition. If repairs are needed, the company may ask for a credit and deduct the costs from the net proceeds.
The state of the housing market also makes selling a house as-is much easier than it would be in a more balanced market. “Buyers looking to get in the door or purchase a home to renovate are more likely to scoop up homes selling as-is,” de Jong says.
[Read: When Will Housing Prices Drop?]
Cons to Selling a House As-Is
Some buyers could see an “as-is” home sale as a potential red flag. Buyers may feel more comfortable offering a higher price on a different house, knowing that they can ask for repairs during the inspection. Selling a house as-is could also result in a lower sale price. Sellers could be leaving money on the table by allowing buyers to make lowball offers over minimal cosmetic defects.
Another big disadvantage is that some mortgage loans may require repairs before the lender will approve the loan. “Buyers with Federal Housing Administration mortgage loans typically have repairs required from their bank, and not having the option to ask the seller to chip in on the costs can be a deal-breaker for those buyers,” says de Jong.
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How Does Selling a House As-Is Work? originally appeared on usnews.com
Update 10/11/24: This story was published at an earlier date and has been updated with new information.
