Whatever the reason, though, selling a home “as is” is not as easy as it sounds at first blush. Here’s what you need to know about the process and its pitfalls so you can decide if it’s right for you—and pave the way to a smooth sale.
Step 1: How to list a home ‘as is’
When listing your home, you should make it clear in the description that it’s for sale “as is.” This not only serves as a beacon for bargain hunters, but also weeds out buyers who don’t want the bother of a fixer-upper from wasting your time. Since “as is” homes put the onus on buyers to spend a lot more time and money bringing it up to snuff, your price should reflect that. For instance, if your roof is about to go and would cost $20,000 to replace and your kitchen is sorely outdated and overdue for a $30,000 update, you should knock $50,000 off what your usual asking price might be for a home of your size in that neighborhood.
Step 2: What to disclose in an ‘as is’ home
Selling a house “as is” does not relieve you from disclosing known defects once you have an offer; in fact, you are legally required to do so. The term “known” is key in this instance. If you inherited a property, you may not know about the general state of the home and, therefore, you could be exempt from providing a property disclosure. But if you intentionally withhold known information about issues, the buyer has legal recourse down the line should any problems crop up.
But don’t worry—this doesn’t mean you have to point out every crack in the wall or drafty window. The flaws have to be much bigger than that, like lead paint, sinkholes, or flooding, says Atlanta-based Realtor Bill Golden with Re/Max Metro Atlanta Cityside.
Required disclosures also vary by state, so be sure to ask your Realtor what you’re required to disclose in your area. In certain states, for instance, you’ll have to reveal whether anyone’s died in the house; in other areas, this is not necessary.
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Step 3: Will buyers inspect an ‘as is’ home?
While selling “as is” means the seller won’t be responsible for fixing anything, the buyer may still want to do some due diligence by conducting a home inspection to see what shape the place is in. If the inspection uncovers something bad, the buyer can walk away from the deal with deposit in hand. Worse yet? If a buyer walks away from the property due to issues found during the inspection, in most states you are legally required to share that information with future buyers, says Aram Shah, a Realtor with Florida Capital Realty in Doral.
Also keep in mind that while “as is” is helpful in stating your intentions, that doesn’t mean the buyer won’t ask you for repairs or compensation after an inspection. Whether you agree may depend on how eager you are to unload this home.
Step 4: How lenders handle ‘as is’ homes
If the buyer is getting a mortgage, his lender may require that another contingency is included in the contract called a home appraisal. That’s to ensure the money it’s loaning out isn’t going toward a lemon. In fact, lenders will dole out only the amount of money they deem the house is worth—so if the appraiser says it’s worth less than what the buyer is paying, that could be bad news. That means the buyer may have to cover the difference, or that the lender will demand that you make repairs. If you refuse, yet again, the buyer can walk away from the deal.
How to pave the way to a smooth sale
While home inspections and appraisals can derail the sale of an “as is” home, there are things you can do to keep things on track.