Selling a House as-is

September 23, 2022

Thinking about selling your house as-is? Read our ultimate guide for sellers looking to save time and money by skipping repairs and selling for cash.

Despite the fact that your home may need repairs or major fixing up, it’s not out of the question to sell your house as-is. Off market homebuyers can purchase your home as-is, quickly and for a fair price. As the seller, it’s important to understand what the process entails before you decide to take this route.

Contents of this guide

 

Choosing to sell your house off market

If you’re considering selling your house as-is, it means you’re choosing to go outside the traditional way to sell a house. This is likely because the repairs and fixes required to get the house market ready aren’t worth your time or money.

Here are a few of the situations in which homeowners may want to sell their house as-is:

  • They need to move suddenly for a job change, family or health issue, or financial reason.
  • The home was passed on to them in a will or as part of an inheritance.
  • The house was an investment or rental property and the seller is looking to offload it.
  • The owner doesn’t want to deal with a real estate agent or invest the time to find a prospective buyer for the home.

Deciding to sell a house as-is involves a tradeoff. In exchange for a fast, simple, and direct cash transaction, the seller typically accepts a lower price than in a traditional sale. The as-is home seller avoids making repairs or major renovations and skips the conventional steps involved in a market real estate transaction.

Here’s what you need to know about how to sell a house as-is and whether it’s the best move for you financially.

What does it mean to sell a house as-is?

A popular way to sell your home is through a real estate agent that uses the Multiple Listing service (MLS) to list your home. The MLS is a service used by agents and brokers. The main advantage of using a real estate agent and MLS is the fact that you’ll probably get more visibility from potential buyers. This is a viable option for homeowners who are not in a rush and can wait to find the right buyer.

But listing a home for sale with an agent often requires your home to be in “move-in ready” condition. Perhaps you’re pressed for time and need to get out of the home quickly. Or, maybe the house needs expensive repairs that you can’t afford.

When you sell your house as-is, you’re forgoing the use of a real estate agent and choosing to not list your house on the MLS. This is also known as an off market transaction. An as-is sale means you’re selling your home without repairing it, staging it, or fixing cosmetic issues. It’s meant for homeowners who don’t have the time or money to get everything done and wait for a buyer.

Most common reasons to sell a home as-is

As mentioned previously, there are many reasons homeowners may want to sell their home as-is. Typically, these boil down to a combination of life circumstances and a lack of time, money, or renovation expertise.

Specifically these life reasons, among others, may compel a homeowner to sell their home as-is:

A home may be one of the biggest investments in a person’s life. As such, uncertainty of the future may be another driving factor in wanting to sell quickly. Historically, a recession or economic downturn may increase the need to sell a property.

Selling a house as-is when it needs repairs

If you’re considering selling a house as-is, the house probably needs some updating to be considered turnkey. Hence the “as-is” part. The home may need expensive, time-consuming repairs. As a busy homeowner, this is never a fun place to be.

A common repair strategy is to focus on addressing big-ticket items such as plumbing, electricity, and roofing. Pay most attention to structural issues you need to fix before a sale. It also helps to stay on top of basic safety and compliance issues, like old electrical wiring or loose railings.

Another consideration is to sell your home to a cash buyer or investor and skip the remodeling altogether. At Sundae, we connect homeowners to the largest network of trusted investors who will compete to get you the highest possible price for your home. Learn more here.

Should you sell your house as-is or renovate?

If you’re faced with the decision to sell your house as-is or go the renovation route, the biggest obstacle is figuring out whether the repairs are worth the investment. It will cost both time and money to renovate, so it really depends on your situation. Major updates such as a new roof or having to deal with foundational issues are costly and take months to fix.

On the other hand, if your house only requires minor repairs such as replacing a kitchen sink or installing new cabinets, you may want to address those issues and then list it for sale.

If the home is in decent condition, consider listing it on MLS with the help of a real estate agent. Remember, this option means you’d need to spend the time and money to fix it up. Also, listing it on MLS and using an agent requires you to pay real estate agent commission fees, closing costs, and holding costs while you wait to sell.

Pros and cons of selling a house as-is

As with any big money decision, there are advantages and disadvantages. Here’s what to consider when deciding how to sell your house.

Pros of selling a house as-is:

  • Save money: You won’t have to fork up a lump sum of cash to make expensive repairs. You also won’t pay agent fees, transaction costs, and holding expenses.
  • Save time: You won’t have to spend time and effort coordinating with contractors and getting repairs done, which may take months. You also bypass the time taken by showings, cleanings, open houses, and other steps in the traditional listing process.
  • Avoid stress: Putting your house on the market the traditional way means you need to wait for a buyer to view your house and then make an offer. Selling as-is means avoiding the uncertainty of waiting, negotiating, and navigating a complex process.

Cons of selling a house as-is:

  • Lower sales price: You may not get as much money in the transaction because there is likely some work that the buyer will need to do upon purchasing the house.
  • Vetting buyers: You’ll need to be responsible for comparing offers and researching buyers.
  • Do-it-yourself: You are responsible for closing the transaction of the home purchase without the help of an agent.

Selling as-is versus selling on the market

When you sell your house on the market, you’re likely signing a contract to work directly and exclusively with a real estate agent. Ideally, the agent has all of the marketing tools (and connections) to push the sale of your home in a timely manner. An agent lists the home on MLS, coordinates open houses, and is the point person for the home’s closing transaction.

When the house sells, the agent takes a cut of the sale, usually between 5 and 6 percent of the home’s sale price. Note that many real estate agent agreements have a clause that states they have the “exclusive right to sell.” It means the agent will receive a commission regardless of who finds the buyer.

While selling with a real estate agent is a popular way many homeowners sell their property, it’s expensive. It’s also best suited for updated homes. Because buying a house is a huge financial decision, most buyers want homes that they can live in immediately.

There are other, more clever options to find a buyer. You’ll just have to be prepared to put in the legwork. Here are three alternatives.

Alternative #1: Selling to a cash buyer

When you sell to a cash buyer, you’re selling off market and not listing your house on an MLS.

An investor or cash buyer purchases homes so they can renovate and resell the house for a profit. These kinds of buyers may not need to see the house or be concerned with renovations since they plan on making repairs anyway. Because of this, a cash buyer may present a hassle-free way to quickly sell your home.

It could also be a way to avoid paying hefty closing fees. With Sundae, you can avoid the closing fees altogether. You can also close in as little as 10 days. This is very helpful if time is of the essence and you have to vacate quickly. If you need cash upfront, you could also ask for an advance. Sundae offers up to $10,000 to eligible sellers.

Keep in mind that you will need to negotiate on your own and work with the buyer on closing transactions, such as escrow and title. These types of transactions are traditionally handled by the real estate broker and lender. You are also responsible for shopping around and comparing offers.

Remember to do your research before you draw up a contract to sell. Choose the best buyer, as not all buyers are the same. Look for online reviews and testimonials from real customers to help you decide.

Alternative #2: Selling to an iBuyer

Within the last few years, iBuyers have become increasingly popular. An iBuyer is basically a real estate company that uses technology to estimate your home’s value so they can make an offer to purchase it from you directly.

Just like any of the other options, it’s important you do your homework so you know the potential risks of partnering with an iBuyer when selling a house as-is.

Alternative #3: Listing the home for sale by owner (FSBO)

While it may seem simple to list your home on your own, there are many challenges. You need to accurately price your home, show it to potential buyers (through open houses or virtual tours), as well as manage the paperwork and financial aspects of the sale.

FSBO requires a lot of time and effort on your part. The potential upside is you can save on the transaction because you’re cutting out the real estate agent. But if anything goes wrong, the full burden is on you.

Comparing different ways to sell your house

It may help you to understand what the term net proceeds means, especially if you don’t have a lot of experience selling a house. It’s the amount or profit you’ll receive after you sell your house, minus all expenses that went into the transaction. These include:

  • Commissions
  • Closing costs
  • Repairs and concessions
  • Transaction fees
  • Holding costs

What to look out for when selling a house as-is

There are pitfalls to be aware of when selling a house as-is. Many aspects of the buying and selling process are not transparent. Predatory buyers will take advantage of sellers in compromised situations. Some homeowners may not be well versed in understanding nuances, so before you decide to sell, here are some tips on what to look out for.

Red flags when selling a house to an iBuyer

iBuyers may offer an easy way for you to offload your home. In exchange for convenience, iBuyers often charge higher fees and commissions than other homebuyers. If you are interested in selling to an iBuyer, take time to compare offers. Before the home sale, do the math on what your net proceeds will be in any potential transaction.

Red flags when selling a house to a property investor

If your house is damaged, needs repairs, or is outdated, a property investor may be interested in snatching up your house. Generally speaking, property investors pay cash for homes, as-is. Their business model is to buy fixer uppers, remodel them, and sell or “flip” them for cash.

However, similar to iBuyers, many property investors will give you a “vanity offer” without seeing the property first. This vanity offer is higher than what other buyers offer and intended to build up your interest. But once the inspection takes place, the investor may decide to lower the offer price. If you need to sell your home fast, this can set your timetable back and put you in a difficult position.

To solve this issue, we created Sundae’s Marketplace. Our marketplace is made up of a network of hundreds of local investors who we’ve vetted so that you don’t have to worry about being taken advantage of by predatory practices. Unlike other off market homebuyers and investors, we represent you in the transaction with fiduciary responsibility, meaning we will act in your best interest the entire time. We will advocate for you and only you.

Planning for life after selling your house

Thanks (or no thanks) to inflation, we live in uncertain times. When workers lose their jobs and consumer spending adjusts, homeowners often worry about the market as a whole.

Concerns about the health of the housing market may prompt you to downsize and move to a less expensive area. Selling, moving, and handling your personal and financial affairs can be stressful.

Thankfully, there are options for you to quickly sell your house as-is so you can focus on your next chapter. If you lack the cash or time to make repairs and get the house market ready, selling as-is provides a convenient, worry-free alternative.

Try Sundae.

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Claire Tak

Claire Tak is a writer and content expert with a background in personal finance. She is an advocate for improving financial transparency and literacy through content and education. Claire's work has been featured and syndicated in Bloomberg, MarketWatch, GoBankingRates, and The Motley Fool. When she's not writing, you can find her on a snowboard, watching a movie, or traveling.