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Selling 'as is' convenient, but often costly

Dear Real Estate Adviser,
What are the advantages and disadvantages of selling a house "as is." How do I go about doing it?
-- C.B.

Dear C.B.,
Selling a house "as is" can be a minimally profitable, but relatively painless way to sell your asset.

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It not uncommon, either. Sometimes people are at a stage of life where they can't face the prospect of an extensive home-repair process that may involve an assortment of contractors tromping in and out of the house, loss of rest time and privacy, lots of flying debris and other disruptions. A divorce, death of a spouse, job transfer, financial setback or any number of other circumstances can also trigger a quick "as-is" sale. In hot sellers' markets, such as South Florida, buyer demand is so great sellers and their agents have learned they don't have to take financial responsibility for repairs and they don't have to lower prices either, although a buyer's escape clause in the event of costly defects is also common.

Whatever your reasons, there are a few things you should know before you go that way.

First, if you're going to sell "as is," that doesn't release you from the legal obligation to disclose all of your home's known defects to a potential buyer. It just means you will not be obligated to make the repairs and that the buyer is accepting the home in its current condition.

Next, be aware that "as is" can mean many things and it would be a very unusual contract -- and one to steer clear of -- that didn't spell out exactly what it means in greater detail.

Also, there are a few slight variations in "as is" disclosure laws from state to state. California, for example, has a "buyer's inspection advisory" that legally supplants the old "as is" stipulation on the contract. It simply says, "Seller is not obligated to repair, correct or otherwise cure known defects that are disclosed to the buyer, or previously unknown defects that are discovered by you or your inspectors during escrow."

Of course, as a savvy seller trying to get as much money as you can for your property, you may want to consider a compromise to absolute "as is." Determine what relatively simple cosmetic changes you can make that will yield the most bang for the buck. You can do your own research on the subject on the Internet, a library or bookstore -- there's no shortage of practical advisories out there.

Suggestions such as "cleaning to a sheen," repairing cracked tiles, touching up or painting marred walls and baseboards, and giving the yard more curb appeal will be among them.

Realize also that "as-is" sellers have a smaller universe of buyers. In the minds of some, "as is" implies there are hidden defects or something seriously wrong with the house beyond normal wear-and-tear issues.

Sometimes, it takes a special type or visionary to see an "as-is" house as it could be. Often, such a buyer will still ask for a reduction to cover some of the most pressing repairs. So price accordingly.

Also, realize that some would-be buyers may find it harder to qualify for FHA financing to buy your home "as is" because the place may need too many repairs to make the equation work.

And don't be surprised if offers from home investors/flippers dominate. It's getting tougher and tougher for them to find good rehab opportunities through foreclosures because of so much competition, so they're looking for opportunities elsewhere.

Of course, if you're really pressed to get out quick, there are always those companies that buy houses in any condition. However, they generally won't offer you more than 65 percent of the home's retail value.

As for the best approach to selling "as is," that also depends on your motivation. Your odds of getting out faster are enhanced by hiring an agent to list the place. He or she can also advise you what quick fixes will give the home its best sale potential.

If you're trying to keep expenses down and have the luxury of time, a for-sale-by-owner approach may be for you. There are also numerous resources out there on this subject. A compromise may be the use of a discount broker, who performs minimal services but can put your house on the local Multiple Listing Service and advise you on other selling issues -- but won't negotiate its sale.

Good luck.

 
-- Posted: March 26, 2005
     

 

 
 

 

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