Question: Why can't I just sell my house "as is" and lower the price?

By
Real Estate Agent with Virginia Capital Realty

2008-2012 Answer:  Because it will compete with distressed properties which are offered "as is" at much bigger discounts.  Buyers will deduct value at a much higher number than the actual cost of repairs, but most likely, they will not even bother with the math and instead will go on to purchase another home that is move-in ready.

To compete on the market, a house has to be prepared to look "like new".  Yes, it is stressful and an imposition, but remember that you are selling a large and expensive asset.

There is too much competition out there, including new homes. Serious competitors have spent a lot of time and money preparing their homes for sale.  Skipping this important step puts a house in a "fixer upper" category to compete with distressed properties at a huge discount. 

Buyers will also avoid going through the emotional and costly process of making an offer,  tying up their money in deposit funds and pay fees for inspections/loan applications if they are not comfortable that the house will be move-in ready or even "fixable". 

In addition, buyers do not want to waste time and risk missing out on another more desirable house, even if the other house is priced higher.  Often, the additional monthly mortgage cost of a "perfect house" is much more affordable for a buyer than having to finance repairs, after closing, on a fixer upper. 

When a seller is upside down with their mortgage, they feel that spending more money to fix the house is a waste of money. That would be true if they were going into foreclosure. However, the fact remains that if they want or need to sell their home in the current market the money spent fixing a house will still bring in a better and faster net sale. If a seller does not have the funds to repair and prepare, then they must accept deep discounts and a longer sale time. 

Or worse, no sale at all.

 

 

 

 

Comments (14)

Nevin Williams
Fairway Independent Mortgage Corporation - Cary, NC
Senior Mortgage Advisor

Hi Athina - These are all good points.  I would add that most lenders won't fund loans on properties that have issues needing resolving.  To open the property to the entire market (those who need financing to purchase) the home needs to be in acceptable condition.  Great post!

Jan 19, 2012 01:50 PM
Bruce Hicks
Best Homes Hawaii - Honolulu, HI
Your Best Hawaii Realtor!

Athina, good post.  You could have stretched and made this into a series of TWO or THREE posts.  Add some photos or images for that extra UMPH.  My daughter went to University of SOUTH Carolina for one semester.

Jan 19, 2012 01:54 PM
Athina Boukas
Virginia Capital Realty - Richmond, VA
Certified Residential Specialist (CRS)

Thanks Nevin and Bruce.  I tidied up the post a bit and added a photo for some effect!

 

Apr 18, 2012 01:34 PM
Jo Olson
HOMEFRONT Realty - Kettle Falls, WA
Retired - HOMEFRONT Realty @ LAKE Roosevelt

With 1/3 of my market distressed homes - "As-Is" is becoming the norm.  Of course just because it says "as-is" doesn't mean it is ;)

Apr 25, 2012 02:43 AM
Athina Boukas
Virginia Capital Realty - Richmond, VA
Certified Residential Specialist (CRS)

Hi Jo,

So true.  "As is" almost never remains "as is" for typical home sellers...even for some banks!

Apr 25, 2012 03:16 AM
Connie Harvey
Pilkerton Realtors - Brentwood, TN
Realtor - Nashville TN Real Estate

Athina, excellent post. You make very good points about how Buyers will continue to discount the price because of the condition.

Apr 25, 2012 05:57 AM
Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

Remember that Members Only posts are just that - ActiveRain members are the ONLY ones that see them and Google does not pick them up...........therefore, your clients don't see them.

Apr 25, 2012 09:25 PM
Athina Boukas
Virginia Capital Realty - Richmond, VA
Certified Residential Specialist (CRS)

Thanks Connie!

Barbara-Jo, I am unable to have that option at the moment. I am aware that I need to upgrade to a RainMaker account to have the consumer option or Google exposure. 

I used to have it and then decided to step back and not pay the monthly fees.  I had joined just after the original members got the waiver for the "paid" upgrade...so I wasn't sure if I was getting the value I was looking for.  I am considering trying it again.  I really do enjoy ActiveRain and have come back to use it more often...and practicing my blogging skills for now. :)

 

Apr 26, 2012 02:19 PM
Marti Steele Kilby, CRS
Steele Group Realty - La Mesa, CA
Broker/Owner, San Diego, CA

Good post Athina.  Right now our San Diego market is really picking-up momentum so that even the homes with some rough edges are moving quickly.  But I agree with Nevin.  If the home is going to need financing, better not be a fixer.

May 05, 2012 11:57 PM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Athina

Buyers always think the cost to repair is greater than what they really are. It's all a matter of perception. One can walk into a room with peeling wallpaper and think the house needs a lot of work. When a little sweat equity and new paint can turn that into a people-pleaser.

Best to invest a little sweat equity and reap some rewards...or be lazy and stingy and end up not having a buyer.

May 21, 2012 10:11 AM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Athina -- I agree with Pacita -- regardless of the nature of the repairs needed(or perceived) a buyer is going to discount the price at much more than.  Can a seller just sell as is(all real estate in California is sold in this manner according to our MLS) -- of course --- they need to be warned though that it will most likely sell for less and take longer to sell.

Jun 13, 2012 05:41 AM
Athina Boukas
Virginia Capital Realty - Richmond, VA
Certified Residential Specialist (CRS)

Marti, Pacita, Michael:

Unlike CA,  in NC only short sales, REOs and very few other listings are ever sold "as is". Even then the seller can be asked to make repairs/concessions!

Therefore, the more work completed up front by the seller, the better he can control costs and expectations on repairs.  Once the buyer asks for them (if they don't walk away, that is) the seller is at their mercy to make the deal happen/close. 

Jun 13, 2012 01:59 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Athina:  Looks like your post and mine could have gone hand-in-hand together!  I think you're spot-on when you say it's all about the competition in the housing market.  Honestly, which does a seller think a buyer will choose?  A home in need of repair??  Or a home in good condition, priced competitively?  Keep preachin' your advice.  It's sound .. and in a seller's best interest to follow it ...

Very glad to have the chance to "meet".  Hope to see you again in the future ...

Gene

 

Aug 14, 2012 06:36 AM
Athina Boukas
Virginia Capital Realty - Richmond, VA
Certified Residential Specialist (CRS)

Hi Gene, yes our posts do go hand-in-hand!

In the past, I have worked for builders selling out of a model home and know first hand how buyers respond to the clean, neat, new feel of a well presented house. 

Not only was it staged, but we had to clean them daily, empty trash, remove dead bugs, pull weeds, as needed. It had to look perfect.  Re-sale homes should be no exception, especially in a market where the buyer will not expect to build any of their own sweat equity.

 

Aug 14, 2012 07:00 AM