If you’ve ever sold a home before, you know it takes a lot of time, money, and preparation to ensure everything looks perfect. Sometimes it takes repairs, renovations, and touch-ups to make it look more appealing to buyers. But what if you skipped all those steps and sold it as is? It definitely saves time, but is it worth it? Read along while we discuss how much you may lose selling a property as is.
Contents of This Article:
- What Does It Mean to Sell a Property As Is?
- How Much Do You Lose Selling a Property As Is?
- Alternatives to Selling a Property As Is
- Benefits and Risk of Selling As Is
- Spending Too Much Time Managing Properties?
What Does It Mean to Sell a Property As Is?
Most sellers at least make minor repairs before putting a home on the market, while others make significant repairs or renovations to increase appeal. However, selling a property “as is” means selling it without putting any work into it beforehand. Essentially, what you see is what you get with an as-is property.
Many people sell their properties as is because they don’t have the time or funds to fix the necessary repairs. After all, several costs go into selling a desirable home. For instance, if the roof needs repairs, it could cost anywhere from $300 to $10,000. If you add that up along with other necessary repairs, it could cost you thousands of dollars.
Who Buys Properties As Is?
Generally, as-is properties are marketed towards fix-and-flip investors looking for a project. Or, rental investors can benefit from buying cheaper properties, fixing them up, and hiring rental property management in Washington DC to manage them.
The phrase “as is” usually has a negative connotation since it indicates that the seller isn’t willing to put work into the property. However, that’s not always the case. Either way, when you sell your property as is, you may get less than you would with some simple repairs.
So next, let’s go over what you could miss out on if you sell a property that needs work.
How Much Do You Lose Selling a Property As Is?
If you’re selling a property as is, don’t expect to get top dollar for it. However, it depends on the situation and property in question. After all, “as is” could mean many things.
For instance, it could describe a home that needs some minor repairs. Or, it could express a home that needs major repairs before it’s move-in ready. Finally, “as is” could even describe a typical home for sale that the sellers are looking to get rid of quickly.
Either way, whenever you describe a property as “as is,” you can expect to miss out on some potential profit. According to iBuyer, offers may be anywhere from 75% to 95% of what they would be if you made repairs before putting your property on the market.
However, the value of your home depends on several factors. For instance, it depends on how much work the property needs, where it’s located, how long it’s been on the market, and the current housing market.
During a seller’s market, when there are more buyers than sellers, you may have an easier time selling your property as is. After all, it’s hard for buyers to be picky when there aren’t a lot of homes to choose from. However, if there are many homes for sale and fewer buyers, your property could sit on the market longer than usual.
Alternatives to Selling a Property As Is
If you’re selling your property as is, an investor will likely scoop it up at a low price, fix it up, and sell it for profit. So, if you’re looking to sell your property at a favorable price, you’ll want to follow this same method. However, chances are, if you’re considering selling your property as is, you don’t have the time or funds to make repairs or renovations.
If you have enough time to repair the home but lack the funds, there are a few different options. For instance, an FHA 203(k) loan is a government-backed loan that allows a homeowner to repair or renovate their current residence. Your repair expenses are then paid over time as you pay off other mortgage expenses. This is an excellent option for those that understand the value of repairs but don’t have the finances to make them out of pocket.
Another option for those that want to sell properties is refinancing. For example, you can refinance your home and draw from your equity to make repairs and improvements. But keep in mind that refinancing can cost anywhere from 2% to 5% of your loan principal amount.
Ultimately, if you’re looking for the best profit on your home, you’ll want to make at least some minor repairs before putting it on the market. However, there are benefits and risks to selling as is. Read along as we go over them below.
Benefits and Risks of Selling As Is
Selling your home as-is isn’t necessarily a bad or good decision. It ultimately depends on your financial situation and how much time you have to sell your home. You could either benefit from quickly selling your property as is, or you could lose out on potential profits. That said, here are some of the main pros and cons of selling a property as is.
Benefits of Selling a Property As Is
- Fewer Costs- Most sellers pay for minor repairs or improvements to make the home more desirable to buyers. Some even pay for staging or enhanced curb appeal to really grab buyers’ attention. However, you don’t have to stress about making the property look perfect when you sell it as is.
- Simpler Process- Instead of waiting for repairs to be finished, you can market your home immediately and wait for offers. Additionally, you have a greater chance of receiving an all-cash offer for an as-is property, speeding up the process even more.
- Fewer Contingencies- Assuming the buyer has the funds or access to a loan, you can close on the sale quicker and with fewer contingencies. You can sell your home much faster without negotiations about repairs or updates.
Risks of Selling a Property As Is
- Lower Selling Price- While you save money on skipping repairs, you can’t price the property the same way you would if it was in better condition. As such, you could lose money by selling it below market value.
- Fewer Interested Buyers- Depending on the state of the housing market, you could have fewer buyers interested in an as-is property. Generally, listing a property “as is” is a red flag, causing buyers to assume that the home requires several upgrades.
- Potential Appraisal Challenges- If a buyer uses a loan to finance the purchase of your property, the lender will likely require an appraisal. The lender may not approve a loan if the home has structural, safety, or health concerns. Ultimately, this could lead to an appraisal gap between the asking price and mortgage evaluation, which someone will have to compensate for.
Spending Too Much Time Managing Properties?
If you own a rental business but don’t have time to manage all your properties, you may feel forced to sell one. However, instead of selling a property as is, consider hiring a property manager. After all, managing one rental property can be draining, let alone several. So, if you feel in a pinch and contemplating selling, try outsourcing management tasks first.
Bay Property Management Group offers comprehensive services for landlords near Baltimore, Philadelphia, Northern Virginia, and Washington, DC. So, if you’re looking for someone to help complete the day-to-day tasks of owning rental properties, we’ve got you covered. Contact BMG today to learn more about our comprehensive management services.