So I've been getting a lot of questions about "as-is" sales lately, so I want to clarify exactly what it means:
An "as-is" sale in real estate basically happens when the seller doesn’t want to make any repairs or give the buyer any credits or concessions.
It acts as a shield for sellers to protect them against giving up any money later on during the inspection period.
It also relieves them of the responsibility to make repairs, should something serious come up on the home inspection. Seems pretty straight forward right? But it’s actually much more difficult to put in practice.
5 TRUTHS ABOUT AS-IS SALES:
#1. Nobody Cares. "As-is" is usually meaningless to the buyer, because regardless if the property is "as-is" or not, the buyer can still cancel the contract if the condition of the home is not satisfactory. Plus, agents and attorneys know that once they get you deeper into the transaction, you’re more likely to give a concession for fear of losing the deal and having to start all over.
#2 It's Overused. Almost 50% of listings have some sort of “as-is” language. That’s because in a strong market, sellers will use any advantage they can to get the most favorable terms. The problem is with so many “as-is” properties on the market though, is that “as-is” winds up not meaning anything!
#3. Not Compatible with FHA. If the buyer is using a mortgage, the chances of an “as-is” transaction are slim. If it’s FHA, then it’s even more difficult. That’s because the buyer’s lender may also request repairs as a condition for the loan, and most buyers are advised against spending money on repairing a home prior to taking ownership of it.
#4. Lowers Market Value. When buyers or agents see “as-is” sale, they instantly think the home need repairs. This perception can effect the market value of the home. It will also increase the probability of getting low ball offers. You can’t sell “as-is” for top dollar, it just doesn’t work.
#5. Net More with Concessions. If your home is in good to great condition, and you list it at market value, then you will likely net more money in the sale if you make small concessions during the inspection period, rather than list “as-is” for a lower price.Yes, it can be annoying when the buyer asks for a $15,000 credit for chipped paint and a leaky faucet. But if the requests are reasonable then throwing the buyer a "bone” can get you to the closing table faster, which will also save you more money in the end.
There are many smart ways to maneuver through the inspection period, and I’ll share with you some of my favorite tricks in another article.
Till next time!
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