Selling a home can be hard work—you have to repaint it, trim your lawn to bump up your curb appeal, maybe replace the cabinets in your embarrassingly outdated kitchen, and more. But if you’re moaning, “There’s got to be an easier way,” you’re in luck, because there is: You can learn the steps on how to sell a home “as is.”
So what is an “as is” home exactly? It’s when, rather than pouring tons of time and money into sprucing up their home, sellers do nothing at all and just put it out there, warts and all, and hope someone takes pity (or smells a bargain) and bites.
There are many reasons sellers may choose this route: Maybe they inherited an old house and want to unload it fast, or perhaps their own house needs repairs but they can’t stand the idea of living in a construction zone. Or maybe they’re just lazy.
Step 1: How to list a home ‘as is’
When listing your home, you should make it clear in the description that it’s for sale “as is.” This not only serves as a beacon for bargain hunters, but also weeds out buyers who don’t want the bother of a fixer-upper from wasting your time. Since “as is” homes put the onus on buyers to spend a lot more time and money bringing it up to snuff, your price should reflect that. For instance, if your roof is about to go and would cost $20,000 to replace and your kitchen is sorely outdated and overdue for a $30,000 update, you should knock $50,000 off what your usual asking price might be for a home of your size in that neighborhood.
Step 2: What to disclose in an ‘as is’ home
Selling a house “as is” does not relieve you from disclosing known defects once you have an offer; in fact, you are legally required to do so. The term “known” is key in this instance. If you inherited a property, you may not know about the general state of the home and, therefore, you could be exempt from providing a property disclosure. But if you intentionally withhold known information about issues, the buyer has legal recourse down the line should any problems crop up.
But don’t worry—this doesn’t mean you have to point out every crack in the wall or drafty window. The flaws have to be much bigger than that, like lead paint, sinkholes, or flooding, says Atlanta-based Realtor Bill Golden with Re/Max Metro Atlanta Cityside.
Required disclosures also vary by state, so be sure to ask your Realtor what you’re required to disclose in your area. In certain states, for instance, you’ll have to reveal whether anyone’s died in the house; in other areas, this is not necessary.
Step 3: Will buyers inspect an ‘as is’ home?
While selling “as is” means the seller won’t be responsible for fixing anything, the buyer may still want to do some due diligence by conducting a home inspection to see what shape the place is in. If the inspection uncovers something bad, the buyer can walk away from the deal with deposit in hand. Worse yet? If a buyer walks away from the property due to issues found during the inspection, in most states you are legally required to share that information with future buyers, says Aram Shah, a Realtor with Florida Capital Realty in Doral.
Also keep in mind that while “as is” is helpful in stating your intentions, that doesn’t mean the buyer won’t ask you for repairs or compensation after an inspection. Whether you agree may depend on how eager you are to unload this home.
Step 4: How lenders handle ‘as is’ homes
If the buyer is getting a mortgage, his lender may require that another contingency is included in the contract called a home appraisal. That’s to ensure the money it’s loaning out isn’t going toward a lemon. In fact, lenders will dole out only the amount of money they deem the house is worth—so if the appraiser says it’s worth less than what the buyer is paying, that could be bad news. That means the buyer may have to cover the difference, or that the lender will demand that you make repairs. If you refuse, yet again, the buyer can walk away from the deal.
How to pave the way to a smooth sale
While home inspections and appraisals can derail the sale of an “as is” home, there are things you can do to keep things on track.
For one, if you aren’t familiar with the home’s flaws and what is in need of renovating/repairs, you can ask your Realtor for his take or even hire a home inspector to ward off surprises down the line.
For another, set a tight time limit on any contingencies. Typically this contingency period will last anywhere from 10 to 45 days; the shorter that time period, the less time buyers have to inspect and appraise a home and back out.