If your home needs repairs or upgrades, you may be wondering whether you should sell the property as-is or make the necessary changes before listing it. Selling a home as-is can save time and money, but it’s not always the best strategy; It can affect your timeline, your selling price, and your pool of potential buyers. Understanding the pros and cons will help you make the right decision.
What Does Selling a Home “As-Is” Mean?
Selling a home as-is means putting it on the market in its current condition. Buyers understand that what they see is what they get and that any needed upgrades are their responsibility.
However, selling as-is doesn’t mean that you can conceal issues from potential buyers. You are still legally required to disclose any defects you know about, such as cracks in the foundation, leaks in the roof, or past flooding that could have resulted in water damage. Failing to disclose these issues can lead to legal problems down the road.
Note that buyers can still request a home inspection when you’re selling a home as-is, so this is not the same thing as selling without conditions. Buyers can still use issues found during the inspection to negotiate a lower price or back out of the deal. When selling a house as-is, all you’re saying is that you won’t make the repairs yourself.
Pros of Selling a House As-is
There are several benefits to selling a home as-is:
Avoiding Costly Repairs
If the home needs expensive repairs such as a new roof, updated bathrooms, upgraded wiring, or structural repairs, the homeowner will need to pay for the repairs. Selling a home as-is eliminates those costs, which can be helpful if you’re short on cash or you’ve inherited a home and don’t have the money to fix it up before selling.
In some cases, the investment in repairs doesn’t pay off anyway. For example, if you put $40,000 into a new kitchen but it only raises the selling price by $25,000, you’re better off not doing the upgrade.
Saving Time and Stress
Renovations and major repairs take time and effort. You have to get permits, hire contractors, supervise the work, and make decisions about the design. It can also take quite a while to complete the jobs, and in the meantime, you might be paying rent to live elsewhere or paying carrying costs if you’ve already moved. If you need to move quickly, it can make more sense to sell the home as-is.
Easier for Long-Distance Sales
If you’ve inherited a house or relocated, dealing with repairs can be very challenging. In these cases, selling a home as-is can make a lot of sense.
Potential for a Quick Sale and Cash Offers.
As-is properties, especially ones that need significant repairs, often attract investors and house flippers. These types of buyers are prepared to close quickly and usually don’t need a financing contingency. If speed and certainty are priorities, selling a home as-is might be the right option.
Cons of Selling a Home As-is
When you sell a home as-is, you may encounter these issues:
Lower Selling Price
It’s common for as-is homes to sell for considerably less than comparable move-in-ready properties. Buyers expect to pay less for these homes because they’re taking on the repairs and the risk themselves. Expect the home to sell for 10% to 30% less than comparables.
Fewer Buyers
In general, regular buyers don’t want to take on a home that’s listed as-is. These listings tend to attract buyers who are specifically looking for a property that needs work; when you sell a home as-is, you narrow your buyer pool, especially in a buyer’s market where buyers have plenty of choice.
Financing Challenges
Some loan programs, such as FHA and VA loans, have minimum property standards. If your home needs significant repairs, it may not meet the requirements to qualify for a mortgage. This can further limit your buyer pool, even in seller’s markets.
“As-is” Label Drives Buyers Away
When a home is listed “as-is,” buyers might be frightened off by the assumption that the entire home needs to be torn down and rebuilt. Sometimes the repairs that are required are not that serious, but the “as-is” label might keep them from considering it at all.
Less Negotiating Power
By stating that you’re selling a home as-is, you’re signaling that you need to sell quickly. This can open the door to lowball offers, and it limits your ability to negotiate a higher price.
Deciding to Sell a Home As-is
If you’re on the fence about whether to sell a home as-is or do repairs, here are some guidelines:
When to Sell As-is
There are some situations where it’s a smart move to sell a home as-is:
- You don’t have the funds to cover repairs.
- Repairs are more expensive than the amount they’d add to your sale price.
- You need to sell quickly because you’re moving, getting divorced, or you’re under financial pressure.
- The property is inherited or located far away.
- You’re selling to an investor or someone you already know.
In these cases, the time and cost that you save by selling a home as-is could outweigh the potential additional profits from doing repairs before listing.
When to Do Repairs
Here are some situations where it’s better to do the repairs before you put the home on the market:
- The repairs are relatively inexpensive but have a lot of impact. This could include fresh paint, repairing holes in the drywall, and updating the lighting fixtures.
- You have time to make the improvements before you have to move.
- Your local market is stronger for move-in-ready homes.
- Major repairs are needed to the home to qualify for financing.
If in doubt, consult with your real estate agent on which repairs to make and which to forego.
The Middle Ground: Options to Doing Full Repairs
Before you decide to sell a home as-is or make all the needed repairs, consider doing some but not all of them. For example, you can choose to fix only the deal-breakers, such as safety hazards or issues that could prevent the buyer from getting financing.
Another option when selling a home as-is is to offer a credit at closing so that buyers can do their own work. Buyers get the advantage of choosing their own design and contractor and inspecting the work themselves to ensure that it’s up to par.
Get Expert Advice
Can you sell a home as-is? More importantly, should you? If you’re on the fence, talk to your real estate agent. An experienced agent can quickly assess the condition of your home and advise you on what makes sense to repair, and which improvements you can forgo if you’re willing to sell at a lower price.
Most real estate agents can also refer you to tradespeople and contractors who can handle the repairs for you. You can count on your agent’s advice to help you make the right decision about selling a home as-is.
