Selling Your Home As Is
Are you considering selling your home as is? While this option can be great for some sellers, there is a lot you need to know. It’s not as easy as sellers may think. Read on for more information on selling your home as is.
WHAT IS AN “AS-IS” SALE?
Selling a property as is means that you are selling it in its current state, with an understanding that no repairs will be made. The home will convey in its present condition — flaws and all.
The most common reasons people sell their homes as is:
- they don’t have the time or funds needed to fix it up
- they inherit a home
- the land is more valuable than the house
- they have already moved and don’t want to manage repairs long distance
WHAT DOES IT REALLY MEAN?
What confuses matters when talking about an as is sale is that the Virginia contract states that all homes are sold as is – unless otherwise agreed otherwise. That means the seller will consider making repairs requested in the contract, a home inspection addendum, or by a lender (for example, damage from termites that was discovered). It does not mean they will repair everything, simply that the sellers are amenable to considering some repairs.
A true as is sale is one in which the seller will not fix or repair anything in the house, as part of a home inspection or otherwise. Note that when a sales contract is written, the words “as is” need to be spelled out. The buyer must initial this language, ensuring that they cannot later claim that they didn’t know they were buying the home as is. The contract also has different as-is clauses which can delete standard parts of the contract such as termite extermination or repair, complying with codes regarding smoke detectors, orders or notices of violations of a local authority, or requirements imposed by a property owners or condo owners association. The seller may not need to deliver the property free and clear of trash and debris.
DOES THE SELLER HAVE TO DISCLOSE ANY DEFECTS?
It’s important to note that Virginia is a “buyer beware” state, which means that sellers are not required to disclose much information about their property (though there are some disclosures required by federal law such as the lead-based paint disclosure if the home is built prior to 1978 and the residential property disclosure required by the state of Virginia). That said, sellers can’t be dishonest about their homes or actively conceal a known problem.
While a seller would need to honestly answer questions about the home’s condition, they aren’t obligated to point out the home’s flaws to buyers.
USE AN AGENT EXPERIENCED IN “AS IS” SALES
A seasoned Realtor will have experience selling homes as is. She or he will help you decide what, if any, improvements should be made, prepare the required disclosures, and negotiate on your behalf. Of course, your Realtor will do all of these things to obtain the best price possible for your home.
PRICING AN “AS IS” HOME
When you sell a home as-is, buyers typically assume there will be problems with the home and discount the price accordingly. The listing price for a such a home often reflects the amount it would cost a buyer to make the needed improvements.
Know that when selling as is, your home will attract investors, flippers, contractors, and buyers with limited budgets. Don’t be surprised if you receive some low-ball offers and don’t be discouraged. All offers are worth countering – we’ve seen low offers turn into contracts time and again!
HOW AGENTS, BUYERS, AND LENDERS VIEW “AS IS” HOMES
The phrase “as is” tends to raise a red flag with buyers. This language makes some house hunters think, ”What are the sellers hiding? Is there something really awful in this home?” Buyers can be suspect of “as is” homes, passing on even looking these properties, effectively shrinking your pool of potential buyer. That said, agents know exactly what “as is” means. They can explain the process to nervous buyers and help them see the potential value of buying an “as is” home.
While your home is on the market, you need to keep the home clean and in “show ready” condition. Just because selling your home as is doesn’t mean the home doesn’t have to show well. A messy or dirty home is another major red flag for buyers, even those choosing to look at these properties.
It’s important to note that here that the vast majority of lenders require that an “as is” home be free of structural, health, and safety issues. For example, if your home is not up to certain codes (and you opt not to fix them), you are likely limiting your pool of potential buyers to those who can pay cash. Keep in mind that even these cash buyers will expect a bargain price if the home is not up to current code.
The buyer may wish to have an informational-only home inspection with an option to void if the repairs are over their budget.
THE BOTTOM LINE
Selling your home as is can be an excellent option for some sellers. An experienced Realtor will guide you through the many nuances of selling your home as is and help you get the best possible price for it. Often, in order to get the best price for your home, selling your home as is is NOT the best option. However, most who sell in this way understand that the time, stress, and cost of repairs make an “as-is” sale best for them.
If you’d like to learn more about selling your home “as is,” or if you are a buyer looking for such an opportunity, please contact us by completing the form below. We’ve helped many “as is” buyers and sellers in our 25 years in real estate and would love to help you too.
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