Important Things to Consider When Selling Your Home ‘As-is’
If you are planning to sell your home, one of the first things that you need to figure out is whether you will invest in repairs or sell it ‘as-is’. Many people would advise you to fix it up and then put it on the market to command the highest possible price, but this may not be the best strategy in all cases.
Here is why:
- Repairs can end up being a money pit, particularly if you are not experienced in construction and repair work and don’t know how to create a ‘Scope of Work’ – an estimate of all the things that need to be fixed, the timeline for repairs and budget. You will also need a team of trustworthy contractors and workers to complete the job properly.
- It is often very difficult to figure out whether you are getting value for money. For example, you may be planning to invest $10,000 in remodeling the kitchen, but you need to figure out if this investment increased the home’s value that much?
- Fixing a property is a very time consuming process. Investing the money to make your home show at its “absolute best” is definitely not a great idea if you are hard pressed to sell as quickly as possible, due to certain circumstances. For example, you may need to get the property off of your hands quickly because of a job change, divorce, or a looming foreclosure.
- You may need to move out in order for repair work to start. And, if the home stays on the market for 3-4 months, the rent you paid (if you moved into a rental), and carrying costs can cut into your profits big time.
Now that you know why you shouldn’t be too bothered about repairs, here are a few things to consider when selling your home as-is:
Don’t expect the highest comparable price
Selling your home as-is doesn’t mean that you should compromise a lot with the asking price, but you need to be realistic. You should take into consideration the cost of repairs the buyer will assume and how much inconvenience it would cause.
We must also consider that there are still a lot of homes on the market at this time that are pre-foreclosure, foreclosures, bank owned properties and short sales. The majority of these homes are sold “as is” and are driving down the price of the surrounding homes.
Determine whether repairs are cosmetic or non-cosmetic
Some of these issues may be cosmetic (stretched or old carpets, bad paint, cracks in the driveway, wood rot, nail pops, etc.). Examples of “non-cosmetic” home inspection items are as follows: a stove burner not working, an ice maker not functioning properly, a window not staying open–this is a safety issue–, a roof leaking and an electrical outlet with reversed polarity etc.
Cosmetic repairs can be dealt with easily, but ‘non-cosmetic’ repairs can be very expensive. You should realistically evaluate the estimated price for these repairs, before determining your asking price.
You can sell your home to an investor
If you think that selling to a regular buyer is difficult because of the issues with the property’s condition, you can easily find an investor. Most investors will buy your home for cash and close the deal quickly. It is primarily because they don’t have to go through the tedious and time consuming process of mortgage approval. You don’t even need to hire a real estate agent for listing your property and finding buyers. That way you save on agent commission as well.
When you sell to a regular buyer and the deal is contingent on home inspection, any major defect with the property can end up being a deal breaker. This isn’t the case with investors. They will buy the property regardless of its condition, because they generally have a dedicated team of contractors to make repairs.