There are times when a homeowner who is selling their home might want to try to sell "as-is". When a homeowner sells as-is, they expect the buyer to take the home in the condition that they found it, and be responsible to repair any issues that might be uncovered during a home inspection. Is it a good idea to sell your home this way? And what are the pros and cons of doing so?
When is it a good idea to sell your home "as-is"?
If you know the home you're selling needs a lot of work, and you neither have the time nor the resources to address what needs to be fixed, then you might want to sell as-is. This works well if you are reasonable about your price. For example, if homes similar to yours in your area are selling for $350,000, and your home needs approximately $50,000 worth of repairs to it, then it would be reasonable to price your home at $300,000, as is.
When is it NOT a good idea to sell "as-is"?
Many sellers want to sell their homes as-is because a) they don't feel like going through the hassle of making repairs, and b) they don't want to give up any more money in the home inspection phase of the sale. However, if there is really nothing outrageously wrong with the home, this strategy can backfire on a seller. Unless the home is priced substantially below the market already, a seller offering an as-is sale can expect to get lowball offers from buyers. Many buyers assume that, since you're looking to sell as-is, there might be something wrong with your home, and they want to leave themselves room in their budget to make repairs. Thus, you may get even less than you would have if you had priced your home with the market and agreed to be open to repair requests.
A hidden pitfall
There is a hidden pitfall with selling as-is that many people are not aware of. Unless there is some pretty strict language in the contract, a buyer will have the right to have a home inspection, and they will be able to back out of the contract if the home is in worse shape than they thought. But that itself isn't the problem.
Let's say a buyer has a contract on a home, and during the home inspection, it comes out that there is an issue with the foundation. They don't feel the home is worth what they're paying for it with a foundation problem, so they cancel the contract. Now, since the seller knows they have a problem with the foundation, they have a duty to disclose it to future buyers. You can't sell a home with a latent (or hidden) defect and not inform buyers of it. This will not help that seller get a strong offer from the next buyer, because buyers don't typically put big offers on homes with big problems.
So how do you sell your home and not lose during the home inspection phase?
When my clients want to sell as-is, and my professional experience is telling me this will result in them taking less money for their home than they could, I tell them that we shouldn't market it is an as-is sale, but we should address it when negotiating offers. As part of the negotiating process, I let the agent for the buyers know that we will agree to a price, but when it comes to home inspection issues, my clients will address safety or health-related issues, but that we expect them not to nitpick over minor issues that might come up, like a leaky faucet. Most times, this does the trick.
If you're thinking of selling your home and you're not sure the best way to position your home to get the most money possible, give me a call at 908-705-5110, and we can talk about your options. And find more great information on home buying and home selling here at MoveMeMark.com!