In most markets, selling your home as-is is not the best strategy. But, in some circumstances, it could make sense. If the property needs significant renovations to be attractive for the average buyer or you simply don’t have time to list and sell it then selling your home as-is seems to be the best strategy.
There can be numerous pros and cons to each approach, but with so many different opinions out there, it can be challenging to figure out what’s best for your situation.
Both scenarios involve expenses related to real estate agents and third-party services.
However, if you sell the house as-is, there will be no possible buyer inspections or negotiations on fixing up the place to make it more appealing before putting it on the market.
For instance, in a typical home sale scenario, a buyer might request $2,000 credit at the time of inspection, when the property inspector finds out a serious plumbing issue. On the contrary, when selling a home as-is, you are not accountable to pay for any repairs.
Although there are not any specific rules to know the exact amount of money you lose when selling a house as-is, still some of our experts at NEA Rental Properties disclosed some numbers by evaluating several successful deals made recently.
So, if you don’t feel like spending tens of thousands of dollars on renovations before putting your house up for sale again – read on for how much you can expect to lose when selling your house as-is…
Pros of Selling a House As-Is
One of the biggest benefits of selling your house as-is is that you can get top dollar for your home.
By taking care of all the cosmetic issues, you can quickly sell your house and make a large profit.
It is important to note that this does not mean that your house must look perfect when it hits the market. But you should still take care of any minor repairs and add cosmetic touches if needed. If you do so, you will have a very successful sale that comes with little to no hassle.
Without regular upkeep, your home will start to deteriorate quickly and could eventually lead to water damage and other harmful problems. By following all the necessary steps and maintaining your property, your home will surely sell for top dollar in no time at all!
Another benefit is that you can turn your home into quick cash. If you have equity in the property, this is an easy way to turn your home into cash. You can also sell your house before repairs are needed, saving both time and money.
Cons of Selling a Home As-is
When you sell your home an as-is, there is a greater chance that you will receive less money than if the house is in great condition. You might also have to wait a long time for buyers or pay higher closing costs sometimes.
If you want to lower your expenses and avoid delays, it’s best to invest in a professional home inspection before you list your home.
Another problem with as-is sales is that they can be difficult to sell. Not only do you have to compete with other homes in the same price range, but you also have to compete with more attractive offers. If your home has a lot of defects, potential buyers might not want to take a risk on it.
Factors Evaluating “How Much Do You Lose Selling a House As-Is?”
Before getting into any other discussion, let’s dive directly into some of the most crucial factors impacting the amount of money you lose when selling your house As-is.
The Type of Buyer
Most people have an idea of which type of buyer they are dealing with before they put the house on the market, but there are some buyers who try to take advantage of sellers.
For instance, first-time or new home buyers are usually looking for a great deal and willing to negotiate with the seller. They will observe the property from every corner, and since they don’t know the exact price required for repairing the house, they end up asking for considerable low biddings.
Besides, more experienced buyers and real estate firms are more likely to be knowledgeable about real estate and able to meet the home repairs with limited bills. They will handle the overall transactions (including closing costs) more smoothly and you will get the deal done swiftly.
Usually, according to the data driven by most of our deals, home sellers can expect to get 75% to 95% of the total home value (AVR) depending on their home condition.
Let’s compare the two scenarios of typical and As-Is home sales;
Selling a Home As-Is
A Real estate firm and cash buyer offer to buy a home that required $30,000 for repairs. The buyer is looking to live in the house after closing while the real estate firm is offering to pay closing costs.
As the seller intends to sell quickly and also considering the chunk of closing costs. The home is being sold to a real estate firm that offers to pay 80% of the total home value (after repairs) i.e., $240,000.
Selling a Home After Repairs
The seller spends 10% on his home repairs, i.e., $30,000 before selling it for $300,000. In this case, the cash buyer buys the home to live in after closing.
The seller also pays $24,000 as closing costs, which is 8% of the total home valuation. After deducting the number of home repairs and closing costs, the seller gets $246,000 in his pocket.
When the home seller offered to sell his house to a real estate firm by proceeding through As-is, he got a loss of $6,000 i.e., 2% of the sales price.
The Condition of Home
The condition of a home can considerably impact the valuation of your home, but it’s often one of the least discussed.
If your home looks like it’s been through a hurricane, you risk missing the right buyer no matter which agent you are working with and how much effort you have put into the overall marketing and presentation. It could also affect how quickly you get the buyer and what price you can get for it.
In addition to this, remember that every home is different, so what might be worth $250,000 one year could be worth significantly less if that same house has been vacant for a long time or has a significant amount of damage.
A home that has code violations and needs a lot of work will be a money pit for any buyer. In order to get better financing, a buyer might need to bring the house up to code – which could cost him tens of thousands of dollars.
If someone wants to buy your house “as is,” they’ll be taking on the risk of bringing it up to code themselves which could cost a fortune.
Let’s sketch a home sale keeping these points in mind.
- The seller has both the options to sell after repairing or sell As-Is.
- The closing costs are 8%
- The condition of the home is near-to-bad.
- As-is estimated at 77% of the total valuation.
- Selling a Home As-Is
The AVR value of a home is $200,000 and repairs account for $15,000. Since the condition of the home is near-to-bad, selling As-is would give 77% of the post-repair value. In this case, the home can be profitably sold to a real estate firm for $154,000.
Selling a Home After Repairs
The post-repair home is selling to a cash buyer for $200,000. The seller has to offer 8% closing costsi.e., $16,000 and has already spent $15,000 on the repairs. Therefore, the seller will get $169,000 after deducting the repairs and closing costs.
When the condition of the home is not well-maintained. The seller can experience a loss of 7.5% when selling through As-is.
Location of The Property
Location is key when valuing a home. A house located in a desirable area with good schools and close proximity to public transportation can significantly increase its value. Conversely, a house located in an undesirable area with poor schools and limited access to public transportation may have a lower market value.
However, some factors are harder to quantify, such as how well the home was maintained or whether the owner took care of the yard and landscaping.
By discussing it with the experts at NEA Rental Properties, we can give a rough idea about the amount of money you will lose based on the location of the property.
If the location is prime and considered one of the best places to live in your city then you might get a cut-off of 2.5-5% when selling As-is. Although it can exceed up to 5-10% in a common area.
After the pandemic, the sellers are interested in keeping their properties and buyers’ demands are skyrocketing, resulting in a massive increase in home values. This means that there is a higher demand for properties which leads to established competition between the buyers. And when the competition is higher, the buyer shows great interest in the property whether it is pre-repaired or post-repaired.
The housing market is driven by the demand for and supply of homes and property. There are many factors that can impact the housing market, including interest rates, employment, and population growth, tax laws, financial regulations, as well as changes in mortgage qualification standards.
Therefore, the money you lose when selling a house as-is depends on the current trends of your market.
Why Should You Sell Your Home As-Is to NEA Rental Properties?
We are always striving to offer maximum-value service to our customers. We have done numerous as-is home selling deals and the sellers always feel fortunate working with us.
Even if you are not sure whether to sell your home as-is or not, we are happy to consult you. As we discussed, there are multiple factors that impact how much money you lose selling a house as-is, we will assist you by giving a proper idea about the valuation and making a worthy offer. Call us at 870-761-5043 or email me at firstname.lastname@example.org or online www.nearentalproperties.com