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!
2018 was a great year for New Jersey’s housing market and economy, but what’s in store for 2019 is still anyone’s guess. If you want to keep a pulse on what's happening with NJ homes values, especially in Union & Essex Counties, pay attention to these 5 areas in 2019:
INTEREST RATES: In 2018 interest rates rose 4 times to finish just north of 5% in December, but then dipped back down to 4.7% around Jan 2nd. As far as the rest of 2019, The Mortgage Bankers Association thinks rates will hold at 5.1%, while Realtor.com predicts the average 30-year loan rate will reach 5.5% by the end of year.
LOCAL DEVELOPMENT: Now more than ever, it’s important to stay in touch with what’s new on a local level. Use Tapinto.net, Patch.com, or your town's official website to check on nearby developments or construction projects and think about they effect home values your neighborhood.
NEW TAX LAW: This year there will be 2 big changes to the federal tax law that will effect many NJ residents. #1 is standard deductions have increased from $6,350 to $12,000 (and up to $24,000 for married couples), and #2 is the new $10,000 cap on property tax deductions. I recommend speaking with a qualified accountant ASAP to see how the new tax law will effect you.
MINIMUM WAGE: NJ lawmakers announced they have reached an agreement to raise New Jersey’s minimum wage. The new law will increase the minimum wage by $1 every year until it hits $15/hr by 2024. The increased minimum wage, along with changes to tax and healthcare policies, will no doubt have a deep effect on small businesses in NJ
STOCK MARKET: Last year was exciting for the stock market, it was like watching your favorite sports team! Now, many experts are predicting a crash is just around the corner. Considering we’ve been riding a bull market for the last 10 years, a correction does seem inevitable. The point is this - GET YOUR CASH READY - great buying opportunities are going to become available soon!
What do you think? Is there something I left off the list that we should be looking at?
-Silvio / Realty 33
65 9TH AVE, EAST ORANGE NJ
65 9TH AVE, EAST ORANGE
4 BR 2 BATHS / HUGE KITCHEN + BONUS ROOM
TOTALLY RENOVATED / BIG BASEMENT & YARD
We just improved the price dramatically on this property,
Now asking $199,000
Low taxes at only: $7,330!
That's a total monthly payment of less than $2,000!
WHY THE PRICE DROP?
Because the seller is EXTREMELY motivated. She lives out-of-state, and wants to move on this sale FAST. She said "Silvio, I just want this house SOLD!"
This home as been fully renovated. Nothing to do but move in.
Take a look at some other great interior pics here
Get in touch with me directly at 973-506-9866.
MAPLEWOOD WAS THE HOTTEST MARKET
Here's a quick 2018 Maplewood real estate market recap:
Median sales price for single family homes went up another 5.5% from $599,000 in 2017 to $632,000 in 2018.
Average Days-on-Market is down from 36 to 31 ( ⬇ 14%) which is also a big drop, showing that homes were selling to well qualified buyers.
Maplewood Announces Affordable Housing Plan
New Parking Kiosks at Maplewood Train Station
ANOTHER GOOD YEAR FOR HOME VALUES
Here's a quick 2018 Irvington market recap:
Median sales price for Single family homes went up an amazing 74%! from $80,500 in 2017 to $140,000 in 2018.
One major reason is that there were less foreclosure sales and more renovated home sales in 2018, which drove up the average.
Average Days-on-Market is down from 95 to 69 days ( ⬇ 27.4%) Which is also a crazy drop in the amount of time it takes to sell a home.
Irvington Director of Health Joins Task Force Focused on Lead in State's Drinking Water
Huge Irvington Development Launches First Phase in 2018
At Realty 33, We tap into 25+ years of experience and market know-how to help our clients make streetwise real estate decisions.