For many buyers and sellers, there is a great misunderstanding about what it means when selling a home as-is. Before I go any further, it is important to understand that the “as-is” reference is for marketing purposes only. The purpose of the label is simply to convey to the public that the price reflects some form of negativity about the property.
Who can buy a home for sale “as-is”
In short, anyone. But the house may not qualify for loan financing and that will knock out any buyer using a mortgage versus cash only. If a seller opts to list their house on the market, and put the “as-is” label on it, they are telling the public and the real estate agents representing those buyers, that the house has issues. Keep in mind, the “as-is” label is really just for homes being listed on the market. If an investor buyer is interested in the property, they are already expecting the home to be purchased in its current condition. Investors do not conduct home inspections in the same manner or purpose as a typical home buyer.
Why does a house get listed for sale with the “as-is” label?
Sellers use this approach because there is something of issue with the house and the seller has neither the means or motivation to address those issues. Two most common reasons for a property to be sold “as-is” are probate and physical defects. Most sellers, those represented by a real estate agent, won’t use this as-is approach if the house just lacks cosmetic updates. In those cases, the agent should really just be pricing the house relative to market demand. A house in probate with an executor assigned, may not have the means for the beneficiaries to make repairs. Or, if the house has severe physical damage that make a tradition sale difficult, again – the as-is clause is a way to promote the reduced price and set appropriate buyer expectations.
Expect a price below market value
The frequency homes are listed “as-is”, but with a the price suggests otherwise happens quite often. This is confusing for any type of buyer. And it will push most buyers away. Selling a house as-is, means you are selling the house for reasons that make it less attractive than comparable houses. Pricing should be below comparable bed and bath houses. Cosmetic updates or full blown structural problems both mean the house will have less interest to the average buyer. And those buyers who are willing to take on a house with issues – want to pay less for that trouble.
Selling a Home As-Is will mostly appeal to an Investor buyer
Investors are always looking for homes to purchase below market value. Namely because the investor buyer expects to pay less for justifiable reasons such as defects. Additionally, these buyers are more willing to address and correct those issue. Cosmetic (very outdated), structural (e.g. roofing), mechanical (frozen pipes), unpaid tax liens or even just unresolved permits, are all issues an experienced investor buyer can resolve.
Want to know more? Have a particular situation that you’re unsure how to handle? Call or text me. Always happy to help and never an obligation to a chat. 203-486-8868. Or email me at [email protected]