When Does It Make Sense to Sell a Home “As Is”?

By 

Michelle Delgado

Updated 

April 20th, 2021

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Definition | Pros & cons | Vs. traditional sale | Required disclosures | Who buys homes as is? | Pricing | Marketing | Repairs

🔑 Key Takeaways
  • When someone sells a home as is, the buyer agrees to accept its current condition — with no negotiation over repairs or upgrades.
  • Often used when a seller cannot afford the time or money needed to fix a home in poor condition.
  • Sellers must follow state laws that require disclosures, and many buyers still require an inspection contingency.
  • As is sellers often use bargain pricing to attract flippers or investors who may provide a cash offer.

What does it mean to sell your home as is?

In an “as is” home sale, the buyer agrees to accept the property in its current condition. The seller won’t negotiate or agree to any repair concessions before going to closing.

As is sales can be a good solution for sellers who don’t have the resources or money to repair their property before selling it. They can also minimize hassles for sellers who need to part with inherited property or a home in very poor condition.

However, there are also important tradeoffs to consider:

💰Pricing
As is sellers typically offer bargain pricing, in exchange for someone taking the property off their hands
👀Potential buyers
If your property is in very poor condition, a traditional lender might not approve a mortgage on it. Instead, you’ll need to find a buyer who doesn’t need traditional financing.

It’s also important to note that an as is sale doesn’t allow you to skip all the hassles of home selling. You’ll still have to follow state laws about required disclosures[1] — and buyers are entitled to use an inspection contingency to back out if your home’s condition doesn’t meet their expectations.

In some cases, selling as is may be your best or only option — but you won’t know for sure unless you compare all of your options. Clever can connect you with an experienced real estate agentwho can help you sell on your timeline, while also saving on commission.

Pros & cons of selling as is

Pros
  • Ability to list your home without making expensive or time-consuming repairs or upgrades
  • No lengthy negotiations over repair concessions
  • May result in a cash offer that can speed up the closing timeline
Cons
  • You’ll have to compromise on price — and may walk away with far less than you could earn (especially in a seller’s market)
  • Risk turning away buyers who can’t secure financing for a property in poor condition

Selling as is vs. a typical home sale

When you sell your home as is on the open market, you’ll follow essentially the same steps as a typical home sale — but you may encounter a few slight differences along the way.

Things that stay the same

For the most part, selling a home as is will follow the same playbook as a normal home sale.

Along with abiding by all required disclosure laws, keep in mind that prospective buyers are always entitled to request an inspection contingency. If their inspector turns up something unexpected, they may be able to back out of the deal.

You’ll also still pay closing costs on an as is sale — typically 1-3% of the home’s sale price.

As always, it’s up to you whether you want to work with a real estate agent or go the FSBO route.

But if your home is in poor condition, or otherwise a tough sell, a realtor’s expertise with negotiations or ability to connect you with a cash buyer may pay off.

🔎 Navigating required disclosures

An as is sale doesn’t waive the seller’s legal responsibilities. In some cases, failing to disclose a known issue could even constitute fraud.

Each state has specific requirements for what sellers are legally obligated to disclose to buyers. These typically include:
  • The presence of lead paint
  • Structural problems, such as a cracked foundation
  • Defects in the plumbing, HVAC, or roof
  • A history of flooding or infestation
However, there are some exceptions. In some states, required disclosures differ when the home isn’t owner occupied — or if both parties agree that it's being sold as is.[2]
When in doubt, it’s always best to be honest, transparent, and upfront with potential buyers.

Key differences

Homeowners often choose to sell as is if their property is in poor condition — and this can cause some transactions to deviate from a typical home sale.

Most importantly, your home’s condition may impact the type of buyer who can purchase it.

In a nutshell, your home will have to be inhabitable and structurally sound[3]

to qualify for a traditional mortgage. Appraisers use a scale from C1 (good condition) to C6 (very poor condition)[4] when evaluating homes — and lenders will typically approve financing only on homes that meet their standards.

If your home doesn’t meet lenders’ standards, you can still find a buyer for your property — but you’ll have to look beyond the mainstream.

In particular, investors and house flippers often use alternative sources of financing, such as cash or hard money loans, that don’t require a lender’s approval. They’re always on the lookout for great deals, and as is sales often catch their attention.

Because many steps in a typical home sale (such as appraisals) are required by a lender, accepting a cash offer may also help you make it to the closing table faster.

Who buys homes as is?

In general, there are two routes you can take while selling a home as is:

  • Selling to an individual
  • Selling to a company

Your home’s condition will impact the options that are available to you. Most individual buyers need to take out a loan to purchase a home — something that may not be possible if your home is in very poor condition.

If a bank won’t approve financing on your home, you may end up working with specialized buyers or companies that focus on making cash offers.

Buyers who may be looking for opportunities to purchase a home as is include:

  • Buy-and-hold investors: Real estate investors often look for homes they can transform into rental properties. They want to spend as little as possible to earn a profit — but they often have access to non-traditional loans through their networks.
  • Flippers: To earn money, flippers have to purchase homes they can renovate and sell for a profit. Depending on your home’s condition, an as is sale might be an attractive opportunity.
  • Cash buyer companies: Across the nation, companies such as We Buy Ugly Housesand MarketPro Homebuyers provide fast cash offers to homeowners. (Learn more.)
  • iBuyers: Most iBuyers focus on buying homes that don’t need extensive repairs — but as a result, they pay much closer to fair market value. Some, such as RedfinNow, do purchase homes as is, but your property will still need to meet certain criteria.

Pricing an as is sale

In general, homeowners choose to sell their property as is when they want to avoid making costly repairs — so these properties tend to be priced lower than fully renovated, move-in ready homes.

Ideally, the listing price you choose will meet your financial needs, while also feeling fair to potential buyers who may have to sink thousands of dollars into the property to bring it up to par.

Whether you consult real estate professionals or do your own research, your price should be based on:

  • Comparable homes in your neighborhood
  • The potential cost repairs

For example, if a home needs about $25,000 of repairs, you might price it $25,000 below the fair market value for a fully renovated home.

Consulting real estate professionals

If you’re not sure where to start, real estate agents and home inspectors can help you determine the best listing price for your property.

Real estate agents often offer a free comparative market analysis (CMA) to prospective clients — which is a great way to begin your research process.

This report evaluates your property in the context of the local real estate market, considering factors such as:

  • The condition of your home (and any unique features)
  • Whether your area is experiencing a seller’s market or not
  • The number of homes available for sale in your area
  • Comparable properties in your neighborhood
  • Seasonal patterns in the real estate market

If you’re unsure how to evaluate your property’s condition, you can also get a pre-inspection report. These typically cost $300-500[5]

and will help you estimate potential repair costs and get ahead of unwelcome surprises that could cause your sale to fall through.

How much is your home worth?

Our Concierge Team can connect you with an agent that can help you figure out how much your home is worth, free of charge without any commitments.

⚡ Tips for Marketing Your Home As Is

Every seller wants to showcase their home in the best possible light — and this is especially important if you don’t plan to budge on repairs.

To attract the right buyers and help them see your property’s potential, consider strategies such as:
  • Advertising the home’s potential value after renovations
  • Highlighting your location, if it’s desirable
  • Positioning your property as a can’t-miss bargain in your area
  • Disclosing the pre-inspection report findings up front
Along with listing your property on the MLS, be sure to advertise on hubs like Facebook Marketplace and Craigslist. Flippers and investors regularly scour community message boards as they hunt for deals.

Should you make repairs before selling?

The honest answer is: it depends.

In some markets, sellers who list their home as is might have multiple offers within a week — while other homes could sit on the market, even after extensive repairs.

In general, home sellers usually don’t fully recoup the costs of upgrades[6]

such as adding a deck or remodeling a kitchen.

But depending on the condition of your home, repairs may be needed to bring it up to the typical standards in your local market.

In interviews with Clever’s network of partner agents, we found that the most common repairs include both major and minor fixes:

Major repairs
Minor repairs

If these types of repairs are completely beyond the scope of what you can afford, there are still low-cost things you can do to show your home in the best light, such as:

  • Giving your home a deep clean by dusting, washing the windows, vacuuming, and wiping down surfaces
  • Taking a trip to the dump to remove any trash or broken furniture
  • Donating any items you don’t need or want

Whether you decide to make repairs before listing your home or not, understanding the cost of repairs can help you set the right price — and help you avoid taking a lowball offer.

» READ: Selling a home in poor condition

ARTICLE SOURCES
[1]

Cornell Law School. "As Is." Accessed April 5, 2021.

[2]

Nolo. "State Disclosure Laws." Accessed April 5, 2021. Updated 2021.

[3]

Investopedia. "The FHA's Minimum Property Standards." Accessed April 5, 2021. Updated August 26, 2020.

[4]

Fannie Mae. "Selling Guide." Accessed April 5, 2021. Updated March 3, 2021.

[5]

Realtor.com. "How Much Does a Home Inspection Cost?." Accessed April 5, 2021. Updated June 16, 2019.

[6]

Remodeling.com. "Cost vs. Value 2020." Accessed April 5, 2021.

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