real estate

What to know before selling 'as is'

Steve McLindenQuestionDear Real Estate Adviser,
We are an older couple who would like to sell our home, which is paid for, on an as is basis. Can you advise us on the best way to do this -- or not to do this?
-- Isabel R.

AnswerDear Isabel,
Sure. For starters, there is much less work for you in this selling scenario than in one in which you are making copious repairs. You won't have contractors trooping through the place at all hours, climbing, pounding, clanking and applying all kinds of dizzying materials while you are watching the morning news.

But -- and yes, there are always "buts" in real estate -- there are a couple of things you should realize before you offer your place as is.

First, the more flaws a home has, the smaller its universe of prospective buyers will be. For example, first-time homebuyers typically won't make offers on anything that needs more than light cosmetic repairs. As for those homes in need of numerous major fixes like a roof replacement, only the most dedicated do-it-yourselfers, contractors, flippers or bargain seekers are likely to make offers. My guess is most of those offers will be for less than you'll find acceptable because you will be expected to make price adjustments that will exceed what your costs for repairing those areas would be. Otherwise, the buyer could opt for a house in better condition for the same relative price.

Additionally, some of your potential buyers may find it challenging to qualify for Federal Housing Administration financing because lenders may determine the house requires too many major repairs to be livable and make the deal pencil. Moreover, just the term "as is" psychologically implies to some would-be buyers there's a flaw hidden somewhere in the place the seller hopes will not be discovered, regardless if that notion is patently false.

This brings us to another point: Selling a house -- blemishes and all -- still doesn't free you of your legal obligation to divulge all of the known defects of the place on your disclosure form in the sales contract. And to be on the safe side, it wouldn't hurt to add something like "seller is not obligated to repair, correct or otherwise cure known defects that are disclosed to the buyer or previously unknown defects discovered by the buyers or their inspectors during escrow."

A good seller's agent, also called a "listing" agent, can advise you of what buying priorities are in your given market and possibly suggest some cheap, practically effortless little cosmetic touches that will help sell the house. Planting flowers or otherwise giving the place more curb appeal, replacing cracked tiles, touching up walls, baseboard and fences with paint, and clearing clutter and excess furnishing are among these.

Unless you understand the home-selling process thoroughly, you probably should forgo the temptation to sell by owner in this instance. With so many poorly maintained as is foreclosure homes on the market, you will likely need some marketing oomph to make yours stand out. You do have a few more positives working for you than most of the other distressed as is sellers out there. Because your home is paid off you won't be under pressure to hit a specific number to repay your mortgage. Plus, with a little more time on your side than most, your chances of finding a buyer at a reasonable price are greater.

Good luck!

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