Selling a Home As Is: Meaning, What to Know, Pros and Cons

3K Shares

Many consumers have preconceived notions about selling a house as-is where-is.

It’s probably not exactly what you think.

Sometimes, when you sell a house with issues, selling it “as is” may seem like the most straightforward course of action.

Most homeowners assume that selling an as-is house means they will not have to make any repairs to the property (which is true) and that it will be practical and involve the least amount of stress (which may be far from true).

Before you sell your home this way, you should know what marketing as-is entails.

What are the pros and cons? You may have considered this question if you plan on selling a property.

There are some significant downsides to selling a house untouched. Once you understand your options, you may decide that there are better ways to sell your home that will lead to outcomes you can be delighted with.

From many years of experience as a Realtor, your sale price will always be better when you don’t market in this fashion. My best advice is to avoid this strategy.
The majority of all homes sold this way end up selling for less than if some minor improvements are made. You don’t have to spend significant money to enhance your home in ways that will make a meaningful difference.

What Selling As-Is Means

To sell an as-is house means that you are selling the property in its current state, understanding that no repairs will be made and that the home will come with all its present faults and issues.

“As is” has a legal definition, and the buyer will probably have to sign paperwork indicating that they understand the exact terms of the transaction.

When you buy a home “as is,” it’s typically spelled out in the purchase and sale agreement.

Keep in mind that, technically, all houses are sold as-is. A seller is never legally required to repair or modify their property for a buyer. You can’t force a seller to change its current condition.

What It Does Not Mean

Unfortunately, many homeowners mistakenly think that selling in this fashion relieves them from all the general obligations of selling a home. They imagine they can unload the property for whatever price they can get while avoiding the need to talk about or disclose any issues with the house.

Selling as is does not relieve you from your legal obligation to answer questions honestly concerning the existing problems with the home per your state’s rules.

In Massachusetts, sellers do not have to disclose defects, but they have to answer questions honestly about the home’s condition. Non-disclosure is known in real estate circles as “Caveat Emptor” or “let the buyer beware.” The only real estate disclosure a seller must make is their knowledge of the presence of lead paint.

Sellers in Massachusetts are also not allowed to hide defects intentionally. Even when you are selling this way, you have to obey these rules. Sellers have to avoid misrepresentations of fact or failing to respond truthfully to a specific question from a buyer.

However, home sellers should understand that real estate agents are held to a higher standard when disclosing a home’s defects.

Realtors are being held to higher standards due to the Consumer Protection Act, also known as Chapter 93A.

Therefore, Realtors must disclose any fact that could influence the buyer to avoid a real estate transaction.

For example, if a real estate agent knows that the seller’s basement floods every spring, a Realtor must disclose this!

From many years of experience as a Realtor, many homeowners believe if they sell a home in it’s present condition, it relieves them of disclosing the properties warts. This is not the case, when a buyer asks a direct question.

Essential Facts to Know

1. Selling a home “as is” means selling the property in its current condition without any repairs, upgrades, or renovations.
2. It can be an attractive option for sellers who do not want to invest time and money into fixing up the property before selling.
3. Buyers should assume all responsibility for necessary repairs or renovations when purchasing a home left untouched.
4. Disclosure laws in the state dictate the responsibilities of owners to disclose any work needed for the property.
5. Buyers are encouraged to conduct thorough inspections before buying a home in their existing condition.
6. Homes sold the way they are usually come with lower price tags, as they factor in the potential costs of the process to fix the place.
7. Selling a home this way can help expedite the sales process, as there are no negotiations over repairs or credits.
8. Sellers must accurately represent the status of their home when marketing it as being sold in its present condition.
9. Buyers might face challenges securing traditional financing options for homes sold this way, as lenders typically require certain conditions to be met.
10. Selling a home in its present shape can benefit house flippers looking for properties with potential value and willing to undertake the necessary repairs.
11. Real Estate investors who purchase properties with work needed are almost always cash buyers. Some will be iBuyers if they think they can profit in the current housing market.

Examples of Things a Real Estate Agent Must Disclose to Home Buyers

Here are some other examples of disclosures a real estate agent must make to prospective buyers:

Evidence of a structural defect, like a significant crack in the foundation.
The appearance of mold, either past or present, in the home.
Termite damage.
The roof has leaked, or a prior ice dam caused damage.
The radon levels in the home are higher than the acceptable EPA limit.
Major plumbing or electrical issues.
A significant external issue such as obnoxious noise levels.
Anything nearby the area that could impact the value.
A known legal issue, such as a cloud on the title or the property, is a short sale.

Unoccupied Homes Can Be More Problematic

Not all problems with a home are evident. Real Estate agents do, however, have a duty to disclose if they discover some problem or the owner lets them know.

Over the years, while selling property in Metrowest, Massachusetts, there have been times when a seller has asked to sell as-is because they have never occupied the home and, therefore, have limited knowledge of its condition.

Real Estate agents should be cautious in this situation. Again, while a seller is not required to disclose potential problems, real estate agents must tell.

Most sellers are honest and voluntarily inform real estate agents of any known issues they are aware of. However, never occupying a home is much more complicated.

Instances, where sellers have never occupied a home, could include an estate sale or a fix and flip. The seller probably could know the latter more than the former.

Most real estate companies ask sellers they represent to fill out a Seller Statement of Property Condition document. This report outlines what an owner knows and doesn’t know about their home, allowing agents to represent a property more accurately.

Completing this form lowers a real estate company’s errors and omission insurance.

What Are The Problems When You Sell in This Fashion?

You might be thinking, what on earth could be the issue from a buyer’s perspective with purchasing this way? Unfortunately, buying a home as-is has a negative connotation.

These are the potential problems with selling a home with no work. Many disadvantages should be considered before selling this way.

1. Buyers Will Perceive Your Home Negatively.

With most things in life, perception becomes a reality.

If you are selling as-is, you can bet that most buyers will view your home negatively.

They may still try to purchase it, but the moment they see the as-is, they will assume something seriously wrong with the property – something bad enough that you can’t afford to fix it or that it is not fixable.

2. Buyers Will Lowball You.

Under the assumption that your home has severe defects, the buyer will bargain with you like you are desperate.

You can expect offers that are probably less than what you want or what your home is worth. Lowball offers are far more familiar with houses sold as-is.

3. It Will Be Harder to Demonstrate Why Your House is Worth The Asking Price.

You or your Realtor will have an uphill battle to demonstrate to potential buyers that your home is worth a fair price. Because buyers will be coming into the real estate transaction with so much negative baggage, it will be challenging to break through the assumptions to show plenty of reasons why your home is desirable.

Remember that there may be a trust issue on the buyer’s part as to why you are selling your home “as is.” Buyers may automatically assume you are trying to hide something.

4. You Will Attract Fewer Buyers.

Because your listing says as-is upfront, you will drive away a lot of potential buyers. Even if you are in a position where you want to put minimum effort or money into the home to make a sale, you could still benefit from avoiding the as-is designation in the listing.

Let buyers come and make offers, see how you feel, and then turn down requests to make repairs if you think it is the right choice. If your home doesn’t need significant repairs, it would be more important not to market this way.

Reasons To Sell a House With Its Current Flaws and Needed Fixes

Most homeowners should avoid starting off a sale with as-is. However, there are certain situations where it could be desirable. In these cases, you must know how to sell a home as-is.

These reasons include the following:

1. You Cannot Afford to Make Any Repairs.

You may be in a financial situation where repairs are just not feasible. No money is in your budget, especially considering the number of items needing work.

If the property has defects and you have no way to repair them, you may have no choice but to sell it as-is.

However, keep an open mind and talk to your Realtor before selling.

Your Realtor may be able to develop some creative solutions that will allow you to avoid selling it this way or at least avoid putting it in your listing right from the beginning.

2. You Really Cannot Handle The Stress of a Home Sale.

Sometimes homeowners find themselves in situations where they have to sell their homes, but they can not deal with the stress that a drawn-out sales process entails.

If you are seriously ill or otherwise incapacitated and do not believe you can handle the hassle of the selling process, you may decide that it makes the most sense.

This could be the case when selling a condo as-is, too.

Again, explore all your options before deciding.

If you can get help from friends or family, or if your Realtor offers to take care of all the stressful aspects, you can probably get a better price for your home if you avoid marketing this way.

3. Financial Distress.

Sometimes, an owner will find themselves in severe financial distress and need to sell their home immediately in its present condition. One viable option in this scenario is contacting an investment company like We Buy Ugly Houses or another like them.

These companies are perfect for those distressed sellers who need an immediate sale.

Real Estate investors like We Buy Ugly Houses usually pay cash and purchase in as-is, where-is conditions. The downside, of course, is that these kinds of home-flipping companies will be looking to purchase your home for pennies on the dollar.

Do not expect them to pay anywhere close to the market value. The upside is that they are specifically not looking for move-in-ready homes.

Having a cash buyer with no typical real estate contingencies relieves much of the stress of selling a home.

A cash offer allows real estate transactions to be sped up substantially.

4. The Property Cannot Be Financed With Traditional Lenders

Sometimes, a mortgage lender cannot finance a property due to its condition. A buyer must get a home improvement loan for some fixer-upper homes to remedy this.

For example, if the property needs a new roof and it’s readily apparent, the perfect kind of loan would be an FHA 203k renovation loan.

This mortgage allows all of the cost of repairs to be rolled into one mortgage. It is the perfect loan product for a home in need of repair. You’ll need to provide the lender with cost estimates to use this financing.

Home Inspections Bring More Negotiations

Another time selling “as is” comes up is after an offer is received before the buyer’s home inspection.

Sometimes, negotiating between a buyer and seller in a home sale can be arduous. From a seller’s perspective, the thought process is, “I just gave the buyer an incredible deal.”

Over the years, many sellers have told me to tell the buyer’s agent during the last round of negotiating an offer that there will be no further seller concessions after the home inspection.

In other words, let the buyer know they are buying the home “as is,” I am not coming down another dime on the price or making any repairs for any defects discovered.

Buyers often ask the seller to pay their closing costs, which they use to make home improvements.

Many sellers who have previously sold homes understand that a home inspection can be a second round of negotiations. Sellers try to head off these unreasonable home inspection requests before they happen.

Real Estate Market Conditions Can Influence Selling in The Same Condition

The current real estate market can significantly impact whether selling this way makes sense.

Most real estate professionals will tell you you must do less when it’s a hot seller’s market.

Homes are going under contract and have very few days on the market. Many home buyers are doing bizarre things, like waiving their right to a home inspection.

If there are no properties to purchase, the condition of your home will become less critical, and minor repairs will become far more acceptable.

You will get a higher price with the expectation of doing less or nothing.

In a buyer’s market, home purchasers will be far less forgiving. That doesn’t mean you can’t sell as-is.

It just means a home’s condition becomes far more vital. Don’t expect to get top dollar when your home is in poor condition.

The Compromise: Doing Minor Work and Upgrades

Sometimes, a seller has little money to invest in their property before listing it for sale. In this circumstance, making a few improvements before listing may make sense.

For example, a fresh coat of paint goes further when selling a home. If you have rooms that need painting or wallpaper that should be removed, doing so can be one of the highest returning investments.

Selling like this when you can afford to compromise a bit may make some sense. It would help if you discussed this with your real estate agent.

Your agent should also be able to point out other things to be fixed before selling the home.

Pricing Properly is Key When Selling in the Present Condition

Pricing a home properly is a skill and an art. Unfortunately, some real estate agents do a horrible job pricing a home correctly. Putting the correct price tag on a home is even more complicated when selling a property.

Many Realtors are unskilled at estimating necessary repairs and improvements, so many homes are overpriced.

An agent doing a comparative market analysis must use other similar properties. The first step is picking comparable sales that match the subject property’s condition. Significant renovations, necessary repairs, and repair costs must be considered.

The fair market value will not be accurate without considering the needed repairs.

Before hiring them, look at the agent’s list price to sale price ratio and average days on market statistics. It would help if you also asked for this information about any homes they have sold in their present condition.

Selling a House For Cash

We have covered selling a property on the open market, but you can also sell to an investor instead. Selling a house to a real estate investor is best for a quick sale.

<p>As mentioned above, We Buy Ugly Houses is a well-known company that will provide a fast present condition. However, many investor companies would gladly purchase your property in its existing condition.

With any of these companies, you can sell a house quickly. Most will close the sale in 30 days or less. One of the most significant benefits is selling for cash.

How Much Do You Lose?

When you sell a house to a real estate investor, you will lose significant money. Real Estate investors will pay much less than the value on the open market.

You can plan on an investor offering 30-50 percent less than the market value. You will lose a significant amount of your equity if you sell a house as-is in this fashion.

But if you’re desperate, selling to an investor is the best way to do the sale quickly.

Can You Sell a House Without an Inspection?

Yes. When you sell a house to an investor, they will not do a home inspection.

Selling a house without a home inspector visiting the property in a seller’s market is also possible. Buyers often waive inspections to compete with other buyers.

You will avoid the headache of seeing everything found in a home inspector report and listening to the buyer’s requests.

Can a Buyer Get a Loan on a Home Sold This Way?

It depends on the condition of the property and the financing the buyer is using. Some loan programs like FHA and VA loans have minimum condition standards.

Understanding whether your home will pass is essential. The mortgage lender will ask the real estate appraiser to verify the condition.

Selling a House By Owner

You might be wondering how to sell a house as is by owner. The same rules apply when selling FSBO.

Selling a home without a Realtor can be challenging, and determining the listing price will be even harder for a layperson.

Those who sell by owner often get less money than those selling with an agent, even considering not paying a commission. If you want the best price, having your home on the open market is the right way to achieve that goal.

Is it a Good Idea to Sell a House This Way?

Most of the time, it is not the best plan to market in as-is condition. You may end up selling your home in its present state, but you should never advertise in this fashion unless you intend to sell to an investor.

As-is carries with it a negative connotation.

When Should You Sell a Property as it Stands?

You should only sell a house as-is when you need to sell immediately and are willing to take less than the market value.

Talk To Your Realtor

Every home sale involves a unique property and a unique seller(s) with specific needs, goals, and limitations. You may need to consider selling as-is. Or, you may need a sales plan that caters to your situation.

The best way to determine your options is to speak to your Realtor. They can look over your specific home, and you can explain what you want/need. Then, your real estate can help you sell your home on your terms.

Pros and Cons

Pros

Quick sale: It can attract buyers looking for a fixer-upper or an investment property, leading to a faster sale than making repairs and updates.
Cost savings: You can avoid spending money on updates and staging, potentially saving significantly.
Less hassle: Selling in the current condition means you don’t have to deal with the stress and inconvenience of coordinating repairs, hiring contractors, or managing renovations.
Attracts investors: Real estate investors often look for properties needing renovations, so selling in this fashion can attract more willing buyers to take on the project.

Cons

Lower sale price: It will result in a lower sale price than selling a fully renovated property, as buyers will likely need to invest their time and money into repairs and updates.
Limited buyer pool: Some buyers may be hesitant to purchase a house in its present condition, especially if they are not experienced in handling repairs or renovations.
Longer time on the market: While selling a house as is can lead to a faster sale in some cases, it may also take longer to find the right buyer willing to take on the necessary repairs.

Interesting Statistics Worth Knowing

1. Over 85% of homes sold “as is” are purchased by investors looking for renovation opportunities.
3. Approximately 30% of homes sold this way receive multiple offers from interested buyers.
4. Homes listed this way have an average selling price 10% lower than the market value of similar homes in good condition.
5. About 75% of buyers who purchase homes without upgrades plan to undertake significant renovations or remodeling.
6. On average, sellers who list their homes in existing condition save approximately 5% on repair and maintenance costs before selling.
7. Most (over 65%) homes sold without work need cosmetic repairs rather than major structural work.
8. Homes sold in urban areas have a higher average selling price than those in rural or suburban areas due to the higher demand for renovation projects.
9. Roughly 20% of buyers who purchase a home in its present shape prefer this option because they have limited time for house hunting or want to avoid competition with other buyers.
10. Real estate agents report that about 45% of their clients consider selling their property “as is-where is” to simplify the process and reduce stress.

FAQS

Are there specific market conditions that favor selling homes in their current shape?

Absolutely! Specific housing market conditions can work in your favor. One key factor is the current demand for fixer-upper properties.

In specific markets, there may be a shortage of affordable housing options or a trend towards DIY renovations. This creates a niche market where buyers actively seek out homes requiring work. It allows you to sell your property without making any significant modifications.

Additionally, if the real estate market is experiencing high competition and low inventory, selling a home as is can give you a competitive edge by offering a lower price point compared to fully renovated properties.

What are some tips for marketing and attracting buyers when you sell a property in its present condition?

Focus on highlighting the property’s potential and unique features. Start by thoroughly cleaning and decluttering the home to create a fresh canvas for potential buyers.

Utilize professional photography and virtual tours to showcase the property’s best angles and allow buyers to visualize themselves in the space. Consider virtually staging the home to help visualize how the property could look.

Additionally, emphasize any recent renovations or updates made and the overall structural integrity of the property. By effectively marketing these aspects, you can increase interest and sell your home successfully.

Final Thoughts

When someone asks me whether selling their house as-is would be recommended, the answer is almost always no. The negatives of marketing this way far outweigh the positives.

The best option is to put your home on the market without advertising it being as sold as-is. It is best to keep that language out of the multiple listing service or other marketing material.

Additional Helpful Home Selling Articles

What is a buyer’s perception of selling as-is? See more marketing perspectives this way from another real estate agent, Kevin Vitali.
Four rules about as-is sales – See more helpful guidance on as-is property sales via Kyle Hiscock at Active Rain.
How to sell for sale by owner via Maximum Real Estate Exposure.

Use these additional resources to decide whether you sell as-is or on your own.

About the Author: Bill Gassett is a nationally recognized leader in his field. He provided the above real estate information on selling a home as-is. Bill has expertise in mortgages, financing, moving, home improvement, and general real estate.

Learn more about Bill Gassett and the publications in which he has been featured. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. For the past 38+ years, Bill has helped people move in and out of Metrowest towns.

Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!

I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge Massachusetts.

Summary

Article Name