Just because sellers don’t want to address repairs doesn’t mean they’ll be given a get-out-of-jail-free card: They have to deal with the issues in some way, shape or form before the end of the transaction. Nondisclosure is not an excuse.
Here are six tips for selling a home “as is” that will prevent confusion during the transaction.
1. Pre-listing inspection
Consider obtaining a pre-listing inspection. It’s in everyone’s best interest to learn the home’s true condition so that you can plan accordingly. Prices are arbitrary until all due diligence is completed between the buyers and lender with regard to inspections and an appraisal.
As a seller, it’s better to discover issues on your own before listing the property than of feeling the pressure of an executed contract with timelines and deadlines. Buyers get cold feet and walk away from the transactions sometimes, and you don’t want that to happen because of an inspection.
If the buyers know upfront that there are issues like old plumbing or termite damage, they’ll be less likely to run for the hills.
Once an inspection has assessed the property’s true condition, the seller should obtain estimates from reputable contractors for an idea of the costs a buyer might incur. Remember, a buyer will see the cost as triple what it really is.
I experienced a situation in which a roof needed to be replaced, so we obtained a quote from a roofer before putting the property on the market. One agent said their buyer liked the house but didn’t want to spend $20,000 to repair the roof; $20,000? There was no basis for that number, and I shared our estimate, which was for $6,000.
Make these estimates available to the buyer along with the inspection report. The buyer may get their own inspections and contractors, but at least you’ve given them a baseline so that they’re not sticker shocked.
With estimates based on the inspection report, the seller should talk to their agent about taking care of repairs before putting the home on the market. While a client might want to sell “as is,” a couple renovations might help the property sell faster.
For example, it can be much harder to sell a home with an old roof or damaged plumbing. While a buyer may be willing to take on some things, too many major concerns are often a deal breaker unless a seller is willing to offer the home well below market value.
Make sure to price the home to account for the work needed, because that is how a buyer is going to think while they’re deciding what to offer. They will be mentally adding up everything that needs to be done—both cosmetic and structural.
The home may be livable in the seller’s eyes, but the buyer isn’t going to put up with outdated or damaged elements for long. Although the water heater may be working just fine, for example, you will need to account for the fact that a buyer will likely have to replace it shortly after closing.
5. Be upfront with ‘As Is’ Condition
Make it clear in the listing and on all marketing materials that the home is being sold in its present condition. Most importantly, make sure the contract references this and, if necessary, use an “as is” addendum if that is commonplace in the market where the home is being sold.
Be forthright in referencing inspection reports and estimates that are available for review.
6. Be flexible
Although you may indicate that the home is being sold “as is,” buyers may still want to negotiate. Be prepared to account for the items that need fixing, whether it be in the form of a price reduction, a closing cost concession or agreeing to address something that could prevent the buyer from obtaining homeowners insurance, such as replacing an old electrical panel or plumbing.
The phrase “as is” tends to set off an alarm with buyers. What does it mean? What are the sellers hiding? Are they concealing something really awful?
Knowledge is power, and uncertainty breeds fear. Selling a home “as is” is all about eliminating surprise and setting and managing expectations upfront.
Always remember that surprises in real estate are never a good thing.
–Cara Ameer is a broker associate and REALTOR® with Coldwell Banker Vanguard Realty.