Sell a House As-Is For Cash and Make a Great Profit – A Beginner’s Guide
It takes patience to sell a house as is for cash the first time around, so you have to know how to do it right to earn the largest profit – and avoid the “we buy ugly houses” scam. Even amid economic uncertainty, the housing market for existing homes keeps performing well, far better than you’d assume at a glance.
According to new data from the National Association of Realtors, sales of existing homes rose 2.4 percent in August 2020. Since last year, the NAR also reported that the median price of existing homes rose 10.5 percent.
If you’re selling a house that needs repairs, it might be time to consider posting an as-is listing strongly, but how do you do it properly?
This short Sell House As Is Beginner’s Guide goes over the essential aspects of as-is home selling.
- What Does It Mean To Sell a House As-Is?
- Is There An Alternative To Your House Selling As-Is?
- Pros And Cons Of Selling Your House As-Is
- How To Sell A House That Needs Updating
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What Does It Mean To Sell a House As-Is?
If left to its devices and not maintained well, every homeowner knows that their property depreciates in a matter of years. Some homes hold on to their value longer than others, but there are numerous factors to consider the local real estate market dynamics, among many others.
For some, an aging rental property can be a reliable source of passive income; for others, that same rental property can be a burden if you can’t afford to repair it.
What works for others may not work as well for you. That’s why it’s so important to receive feedback from a professional when selling any home.
When you sell a home as-is for cash, which is a prevalent scenario, it’s typically because repairs are too pricey, or you don’t have the time to renovate the property.
You might also have to make a quick sale due to financial circumstances or significant life events.
For example, taking ownership of a property on inheritance happens often. Still, not everyone has the financial means to fix an aging, decades-old home, especially a classic home over 30-years old.
Selling a house as-is quickly is feasible, but it’s standard practice to vet all alternatives first, such as performing renovations yourself before listing the property online.
Here’s a quick breakdown of the alternative to selling your home as-is.
Is There An Alternative To Your House Selling As-Is?
You might be asking yourself, “why should I sell my house as-is if I can make more money fixing it up first?”
While this is true to an extent, it’s not a guarantee that you’ll make a better profit, not even close to a sure thing, because so many things can go wrong. Yes, some real estate investors make lucrative careers on “flipping” houses. Still, it’s incredibly tricky to price-out materials accurately for the average homeowner, pay decent wages for labor, and manage the time it takes to renovate a home.
If something goes wrong during renovation, the best you might be able to do is break even if the project goes over budget, and that’s assuming you find the perfect buyer.
Usually, owners of aging homes need the following updates completed before closing on a deal, and this list applies to as-is sales, too:
- New HVAC units (including ductwork throughout the home)
- Water heater replacement
- Repaired roofing
- Rewired electrical components
- Plumbing repairs
If you can afford to make those repairs, yes, you can fetch an excellent price for your home. The problem is that most homeowners don’t think of their home as a “flip” like an investor might. There’s an emotional attachment, which you have to realize doesn’t raise the property’s value anymore or less. Even the best homes deteriorate over time, no matter how much you maintain them.
You could repair the property yourself, replacing the whole AC system and refitting the plumbing, but selling as-is usually wins out when it comes to profiting from an old house that needs expensive repairs.
Pros And Cons Of Selling Your House As-Is
Deciding to sell a home in the first place isn’t an easy choice, and the option to sell the house as-is complicates the matter. A smart home seller knows the pros and cons of selling as-is before making a decision, so here’s what you need to know.
Pros Of Selling a House As-Is For Cash
At the time of this writing, NAR reports that nationally the average price of an existing home is roughly $310,000, an 11.4 percent increase since 2019. It appears that the COVID-19 pandemic hasn’t ruined the housing market, but it has changed. While demand for homes remains elevated, the supply of homes remains low.
From a seller’s perspective, listing a house as-is makes the process much more straightforward. You don’t technically need a real estate agent to sell as-is because some buyers may place cash offers on the listing.
But there are benefits to using a real estate agent to facilitate the deal.
Mainly, real estate agents have the ability to reach a larger pool of potential buyers. The result is that you’ll sell at a higher price point than doing the work yourself.
The most significant benefit of listing your home as-is, as touched upon earlier, is that you won’t have to pay to make the property look new. Making a few modest cosmetic repairs, such as adding fresh paint and new carpeting, may suffice.
The buyers of as-is homes understand they’re buying a fixer-upper 99.9 percent of the time. In fact, that’s the whole point of purchasing as-is houses; they can fetch impressive, but far from certain, profits once updated.
Cons Of Selling a House As-Is For Cash
The cons of selling your home as-is deserve mentioning, too. The downside of listing your home as-is revolves around the fact that you won’t get the best price – period.
The “we buy ugly houses” scam is alive and well. To be fair, there are plenty of reputable corporations that don’t low-ball homeowners with paltry offers.
For many, that may not be a bad thing at all, considering that an idle residential property makes no profit and only incurs more state and local taxes.
Generally, you should aim for 75 to 80 cents on the dollar for an as-is listing.
One of the most significant downsides of selling as-is to a corporate investor is that they’ll usually offer you a mere 60 cents on the dollar, and the offer might be non-negotiable, take it or leave it.
Even when selling your property in its current condition, never fall for strong-arm tactics. Your home, no matter the shape it’s in, has more value than you assume.
Why else would the investor pitch you a low-offer? It’s because they are confident that they can make the sale profitable; they want the better end of the deal at your expense.
Also, cash buyers aren’t automatically the better option because that single investor with cash in hand might be on a corporate investor’s doll.
He might promise you a better deal, but he likely has no interest in the nuances of a deal because he’s already taking his cut of the low-ball offer you’ll receive.
Unfortunately, this type of shady deal-making remains common in the real estate industry. As such, it’s always best to find a partner you can trust to get you a fair deal.
How To Sell A House That Needs Updating
Any home sale requires a lot of time, effort, and patience to overcome the process’s ups and downs. There are always unforeseen circumstances that can delay the closing date – or derail a deal altogether!
What Can I Do To Make My House Look More Attractive To As-Is Buyers?
Buyers of as-is homes will usually understand that they’re buying a property in need of work. Their reasoning varies case by case; sometimes, the buyer wants the daily grind of bringing a property back to life. But selling as-is homes doesn’t mean that you don’t lay a finger on it. You can do a number of things to spruce up the listing before a buyer even tours the property.
If the home dates back to the mid 20th century, you’ll probably get a better price if you remove any and all wallpaper. Painting may not help as much as you might think because it depends on what the buyer intends to do with the property. If he plans to rent it out, then yes, painting here may add some value.
Another way to make an as-is listing more attractive is to replace lighting fixtures in bathrooms and kitchens. It’s an easy win to alter lighting and give the property a fresh look.
Flooring repairs are another issue to consider. If the home has tile flooring, there may be no way to fix it other than hiring professional cleaners affordably.
Aging homes change over time, as different owners have their proclivities. You might come across a situation where a house has no carpeting at all, not even in bedrooms, so it’s a simple renovation to do.
The general rule of thumb is that you don’t need a full renovation to sell as-is because that’s the entire point of selling as-is.
What you see is what you get, and that includes appliances and amenities—making each and every repair may not be worth it in the long run.
What Do I Have To Disclose Before Selling?
The most important part of selling as-is is that you have to disclose everything you think is wrong and know that is wrong. It’s illegal to hold anything back, and that’s where a lot of sellers get into legal trouble. Ethics matter when selling a home, even yours!
There are plenty of real estate horrors stories that began by sellers not disclosing things to buyers like clogged plumbing from years of pouring hot grease down the kitchen sink.
Some as-is sellers also think that you can flip a home without an inspection, which doesn’t comport with basic practices.
Buyers will almost always ask for or perform their own inspections.
One red flag to watch out for is when a buyer doesn’t ask for disclosures or inspect the property, buying it “sight unseen” instead.
In this situation, you would do well to pause, step back, and consider why the buyer isn’t following standard practice. Instead, he may have no intention of updating the home at all and list it as a rental property as-is.
So you have to protect yourself because, legally speaking, disclosures are your responsibility if you missed something. The most common disclosures include:
The laws governing disclosures vary from state to state, so it’s best to know your local market.
At the end of the day, selling houses as-is involves a lot more work than you think, so that’s where we step in to help you through the process.
Ready to sell your house as-is? We can help!
We buy houses as-is, and we pay a fair market price for properties in an as-is condition.
If you’d like to know more about what makes us the right buyer for you, contact us at any time to learn more.