In this crazy world, it seems everything is upside down in the COVID world. Our economy is heading down but we aren’t seeing a decrease in home prices. We are seeing record job losses, and the Fed is worried about an increase in foreclosures during COVID. For those who have lost their jobs, or may lose their jobs, you might be looking to sell your house before any credit damage but you don’t have money to do those projects you never got around to and you want to sell your house without any improvements, which means you need to sell your house as-is.
What Does to Mean to Sell Your House As-Is?
Basically, selling your house “as-is” means selling your house, at least for the most part, in the condition it is in currently. Usually, that means in the same physical condition it is in today. It means that as you sit in your house and look at it right now, that’s how you would sell it. It probably means no fresh paint, no fixing that running toilet where you have to jiggle the handle. You don’t offer to include an amount to fix the foundation, you are agreeing to sell it in the very condition it’s in and the buyer is agreeing to that with you.
In some cases, it could even involve issues with the title or the deed. Perhaps you inherited the property from your grandmother and there are title issues you never took care of or there is a broken chain of ownership somewhere that will make selling it the traditional way more difficult.
Some of these issues make it difficult in the best of times to sell your house, let alone during tough financial times. Thankfully, there are solutions.
Does It Make Sense to Sell Your House As-Is?
It can be difficult to determine if you should sell your house in its current condition. If you are part of the unfortunate group that has lost their job, is short on savings or you fear you may lose your job, this might be your only option. If you have some money to invest, it’s worth doing some research to determine if it might be worth investing a bit of money to get a higher price. Here are some considerations to think about when you are trying to decide if this makes sense
- Need – How badly do you need to sell your house? Are you facing a foreclosure or short sale? It might be the best strategy to get the best deal that you can. Perhaps there are upcoming repairs you can’t take on, finding the right cash buyer can help get you out from under that repair and expense.
- Alternatives – What alternatives do you have? Can you rent it out? Can you sell it for more if you put money into it? Check out sites like Zillow and try to determine what the value of your house might be in a more sellable condition. Be careful. Zillow gives you a Zestimate. By many accounts, Zestimates can be inaccurate, by as much as $20,000 to $50,000 in some cases. Remember that Zillow works by getting houses sold, so by inflating these Zestimates (or even just taking best case scenarios), they can inspire more people to sell their houses.
- The better strategy is often to look at sites like Zillow and Realtor.com to find houses that are for sale or that have recently sold in your area. You need to do this carefully so you don’t overinflate your property’s value. Houses that are for sale are what the owners want to sell them for given the current market, so they aren’t necessarily realistic. Comparing your house to those in your area that have recently sold can be a good strategy. These are called comps. There is a bit of an art and science to evaluating comps but you can get a good idea. Remember to compare the properties with your house in its current state, condition, number of bedrooms, bathrooms, etc.
- A big consideration is if someone can get financing for your house too. If it’s insignificant disrepair, unfinished constructions, foundation issues, or the like, then that will really hurt your ability to sell it on the market.
- Make a list of the potential repairs you could do, their approximate cost, and use your comps to get your best estimate of how much you can sell your house with those repairs or changes completed. Use these comparisons to see if it makes sense to try to make the repairs and sell your house in the normal market.
- Remember to include in your estimate all the costs that come with selling a house. The specifics will vary but you’ll have realtor commissions to start with. You can easily assume five to six percent for that. You can also look at things like closing costs, appraisals, inspections, concessions, escrow fees, title fees, etc. Some of these will be paid by the buyer, but you’ll have to pay some. You can probably use a round number to like ten to twelve percent here to cover most or all of it, except perhaps concessions. If your house still needs work, you can expect buyers to negotiate for more off.
- Some repairs might even keep you from selling the house on the regular housing market at all. Maybe it couldn’t pass inspection or it couldn’t get financed by a bank in its current state or you can’t get a permit. You also need to consider this. Often, these kinds of repairs can be expensive and you may not get back what you put in. These are times it may make sense to look for an alternative.
Benefits of Selling a House As-Is
When you sell your house as-is, you aren’t likely to get as much for it as you might otherwise if your house were in a perfect condition, but it can certainly have its advantages especially in the current economic climate if you are unfortunate enough to need to get rid of your house because of a job loss or an impending foreclosure. Sadly, too many of us are having tough times right now. If you don’t have the money, time, or emotional energy to invest in your house to sell it, it might be worth exploring an as-is deal to sell your house. Here are some benefits to consider
- No additional cash needed to get it ready for sale – There are buyers out there that are looking for these deals and are ready and available to buy them. You’ve seen the signs or the offers “we buy houses” or “cash offers for your house”. You don’t need to put any more money into your house to sell it. These are investors ready and able to make a deal. If this is how you need to sell your home, don’t put any more into than you need to. Save the money to pay your other bills and put food on the table. These investors work with distressed buyers a lot and they usually are able and knowledgeable in working with sellers who are having tough times. They are investors, looking to make money, but they also know their way around the real estate market and can help find solutions.
- Cash Offers – Depending on the condition of your home, a buyer may have a difficult time getting financing which can drag out the deal or even sink it entirely. Many of these deals are or can be cash offers. You can even look for those buyers or advertise your deal that way.
- Avoid Realtor Commissions – You certainly can use a realtor. it’s good to have someone in your corner who knows the system and they can often find you more buyers, but you also pay for it. In many of these deals, it is possible to find a buyer who is willing to pay cash and close quickly and you can avoid paying for realtor commissions. If you do use a realtor, make sure that they have done as-is deals in the past and that they can find the sort of buyer that you will need.
- Done Quickly – You may need this done quickly before the bank comes knocking or something else changes. These deals can often close in a matter of days.
Selling your house as-is often isn’t ideal. Sometimes, though it’s necessary and it definitely has its benefits. In most areas, you can look around and find cash buyers willing to help you sell your house quickly and get you out from under it. If you’re having trouble or you find yourself with perhaps an inherited house you can’t afford to fix up or a similar situation, it may be worth exploring selling it as it is to a cash buyer.