Over 5 million existing homes were sold in 2019. Homeowners had high hopes that they'd be able to beat that number in 2020 as real estate markets continued to heat up.
Unfortunately, COVID hit and the rest is history. While we're seeing some positive signs in the housing market given low-interest rates, for the most part, people are trying to keep their assets liquid so they can weather job losses.
The softening real estate market has driven many to consider selling an as-is house. Selling as-is means taking your house and putting it on the market in whatever condition it's in. This creates conditions where sellers can get rid of their homes fast without needing to put additional investment into them and buyers can scoop up an enticing deal.
Is selling an as-is house right for you? Below, we share seven collective pros and cons.
Pro: You Can Sell Your House Immediately
Sometimes sellers just want to get out of their homes. That want can be complicated by the fact that selling houses takes time. Even in an average market, houses will sit on the sale block for months before getting a serious offer.
When you sell an as-is house, you can put your house on the market fast without needing to manage projects associated with fixing it up. There are also classes of real estate investors that will purchase your house quickly in an as-is state.
Pro: You Don't Have to Make Costly Repairs
In a buyer's market like today, to make your house competitive, you'll need to get it near turn-key condition. That can take a lot of time and cost a lot of money.
Usually, when you're trying to sell your house, you aim to get cash into your pocket, not to spend tons of it.
If you'd rather not hire home inspectors to look for issues and contractors to then go in and fix everything in hopes that your fixes provide a return on investment, selling as-is is the way to go.
Pro: No Real Estate Agents Are Required
Real estate agents are typically a necessity when selling a house. After all, they'll be the ones to get your house listed in the MLS and to market your listing to drum up buyer interest.
In exchange for their services, agents take a cut of your home's sale price which leaves many buyers wondering whether or not the help offered was worth the thousands of dollars spent.
In some as-is home transactions, you can remove agents from the mix and retain the 7% or so commission you would have ordinarily had to pay.
Pro: All-Cash Offers Are Abundant
We alluded to the fact that there is a class of real estate investor that is particularly interested in as-is homes. These investors are usually fix-and-flippers that buy houses at low prices, fix them up, and resell at a profit.
One of the enticing reasons to work with these investors is that they make fast, all-cash offers that could have money in your bank account in under a month. That makes as-is sales to investors a preferred means of selling for homeowners that need cash now.
Con: Your Sale Price Will Be Lower
Unfortunately, selling your house as-is isn't all butterflies and rainbows. This strategy does come with drawbacks, the most noticeable being that as-is houses sell for less.
People that purchase an as-is home take on the liability of making repairs on their own and consequently, will want you to compensate them for assuming that risk. This compensation results in below-market offers.
Con: Banks May Block Certain Buyers
Most people that buy homes do so with financial backing from banking institutions. These institutions will ultimately be the ones purchasing your house and consequently, they'll want to make sure that what you're offering is a good deal.
When banks do diligence on as-is houses, it may be that the potential for adversity is too high for them which could lead to their blocking transactions. That might make it so you end up courting several buyers that are forced to drop out of a deal.
Con: Buyer Skepticism
Even when buyers aren't using bank financing, they'll still be wary of buying a house that's advertised as "as-is". In most states, you're legally required to disclose issues that are plaguing your house. Buyers might think that you're liable to gloss over some of the details though since you're telling them upfront that you're not offering any guarantee on your as-is home's condition.
Most of this distrust can be alleviated by buyer's asking good questions. Questions like — Are you prepared for adverse weather, and have you taken precautions over the years to care for your home accordingly? How is your home's foundation? — could be great, unconventional places for conversations to start!
Other questions can be answered by your buyer assuming the cost of a home inspector running a check on your property.
Selling an As-Is House May Be the Remedy for Today's Market
By opting to market your home as an as-is house, you'll attract investors and other opportunity-driven buyers that may be willing to cut you fast, cash offers. That might make it so you're able to keep your plans of moving on track despite today's adversity!
No matter what you choose to do with your home, our team wishes you the best on your selling journey. We also welcome you to read more of the real estate content we have published in our blog.