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
- What does it mean to sell your house as is?
- Most commons reasons to sell as is
- Should you sell as is or renovate?
- Selling as is vs. selling on the market
- Comparing different ways to sell your house
- What to look out for when selling a house as is
- Planning for life after selling your house
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 MLS (multiple listing service) to list your home. 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 buyers being able to find your home. 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 probably 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 mean 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 may compel a homeowner to sell their home as is:
- Death of a family member
Other reasons to sell a home as is may be due to:
- Privacy (homeowner doesn’t want buyers coming into their home)
- General desire for simplicity (no agents to deal with, no contracts, fewer fees)
- Neighborhood is not gentrifying as expected
As a home is one of the biggest investments in a person’s life, 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. In recent times, the economy is taking a massive hit due to coronavirus.
Will a pandemic affect selling your house as is?
With coronavirus impacting the U.S. and world economy, financial experts warn that we could experience a housing crash similar to that of 2008. With stock markets plummeting, will the housing market suffer? Could COVID-19 drive home prices and sales to the ground?
While home prices and sales of homes may see a dip, new laws and housing regulations could help prevent a second coming of the last housing crash. Nevertheless, it’s important to stay on top of how current events affect your finances, especially if you have plans to tap the equity in your home.
Selling a house as is when it needs repairs
If you’re considering selling a house as is, the house is probably not in great condition. 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 smart 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, our Market Experts can visit your property and make a same day cash offer to buy your house directly. 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. 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 realtor commission fees, closing costs, and the 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.
- 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 vs. 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 a homebuyer like Sundae, you can 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.
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:
- Closing costs
- Repairs and concessions
- Transaction fees
- Holding costs
If you’re trying to decide if you should sell your house as is, the table below serves as a guide for what to be aware of. The cost estimates here use industry averages.
For further help, this article walks you through how to calculate your net proceeds when selling a house.
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 such as Zillow Offers, Opendoor, and RedfinNow may offer an easy way for you to offload your home. But when you deal with an iBuyer, the initial offer is made before they actually see your house. As a result, the offer price often changes later in the process.
No homebuyer can make a 100% reliable offer without having a chance to walk through your property to inspect the interior, exterior, and overall condition of the house. An in-person visit includes an examination of the bones of your house, such as the roof, walls, plumbing, and electricity.
Most retail buyers will back out of a home purchase or attempt to renegotiate prices if certain criteria aren’t met. iBuyers and off-market homebuyers are no different. They can legally reduce their purchase offer for a home after the inspection. They can also cancel the entire contract. Some research shows that selling to an iBuyer will net the homeowner significantly less than market value.
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.
Planning for life after selling your house
Thanks (or no thanks) to coronavirus, we live in uncertain times. When workers lose their jobs and consumer spending declines, homeowners are rightfully concerned about property values. Even in the best of times, selling a home for top dollar is a challenge.
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.