What are the pros and cons of selling a home “as-is”? This is a question you may have thought about if you’re planning on selling a home. Sometimes when you are selling a home that has some issues, selling it “as is” may seem like the easiest course of action. Most homeowners assume that selling a home as-is means they will not have to make any repairs to the property (which is true) and that selling as-is will be practical and involve the least amount of stress (which may be far from true).

To sell a home as-is means that you are selling the property in its current state, with an understanding that no repairs will be made and that the home will come with all its current faults and issues.

“As-is” has a legal definition, and the buyer will probably have to sign paperwork indicating that he or she understands the exact terms of the transaction. When you are buying a home “as-is” it’s typically spelled out in the purchase and sale agreement.

Unfortunately, many homeowners are under the mistaken impression that selling as-is relieves them from all the general obligations that come with the sale of a home.

They imagine that they can unload the property for whatever price they can get while avoiding the need to talk about or disclose any issues with the home.

Selling as-is does not relieve a seller from the legal obligation to answer questions honestly concerning the existing problems with the home per the rules of your state.

Sellers are also not allowed to hide defects intentionally and must answer any questions about the home’s condition honestly. Concealing a known issue (material fact) carries legal consequences in a real estate transaction which could open you up to a possible lawsuit. Even when you are selling as-is, you need to obey these rules. Sellers have a duty to avoid making misrepresentations of fact or failing to respond truthfully to a specific question from a buyer. Home sellers should understand, however, that Realtors are held to a higher standard when it comes to disclosing a home’s defects.

Realtors, therefore, have an obligation to disclose any fact that could influence the buyer not to enter into a real estate transaction.

For example: if a Realtor knows that the seller’s crawl space floods when it rains – this is something that the Realtor must disclose!

Here are some other examples of issues a Realtor must disclose to all prospective home buyers:

• Evidence of a structural defect like a major crack in the foundation
• The appearance of mold in the home
• Termite damage
• Evidence that there was a roof leak
• The radon levels in the home are higher than the acceptable EPA limit
• A major known plumbing or electrical issue
• A significant external issue such as obnoxious noise levels
• A known legal issue such as a cloud on the title or the property is a short sale
• Obviously, not all problems with a home are clear and evident. Realtors do, however, have a duty disclose if they discover some problem or the owner informs them about a problem

Sellers may sometimes ask a Realtor to sell as-is because they have never occupied the home and therefore have limited knowledge of its condition. However, Realtors must still disclose whatever they about the home.

Most sellers are honest and voluntarily inform Realtors of any known issues they are aware of. In the case of never occupying a home, however, this is much harder to do.

Instances, where sellers have never occupied a home, could include an estate sale or a fix and flip. The latter of which the seller probably could know more than the former.

In California Realtors will have sellers complete two important disclosures, among several other disclosures. One called the “Real Estate Transfer Disclosure Statement” and the other the “Seller Property Questionnaire”. These two reports outline what an owner knows and doesn’t know about their home and any defects. It also allows Realtors to represent a property to prospective buyers more accurately.

You might be thinking to yourself what on earth could be the issue from a buyers’ perspective on purchasing a home as-is. Well, unfortunately, there is a negative connotation with buying a home as-is.

There are the potential problems with selling a home as-is and the disadvantages:

Buyers will perceive your home negatively: If you are selling as-is, you can bet that most buyers will view your home negatively. They may still try to purchase it, but the moment they see the as-is they will assume that there is something seriously wrong with the property – something bad enough that you can’t afford to fix it, or that it is not fixable.

Buyers will low-ball you: Under the assumption that your home has serious defects, the buyer will bargain with you like you are desperate. You can expect offers that are probably less than what you want, or what your home is worth.

You will have to work harder to demonstrate why your home is worth paying for: You or your Realtor will have an uphill battle to demonstrate to potential buyers that your home is worth a fair price. Because buyers will be coming into the transaction with so much negative baggage, it will be difficult to break through the assumptions to show that there are plenty of reasons why your home is desirable.

Keep in mind there may be a trust issue on the buyers’ part as to why you are selling your home as is: Buyers may automatically assume you are trying to hide something.

You will attract fewer buyers: Because your listing says as-is upfront, you are going to drive away a lot of potential buyers. Even if you are in a position where you want to put minimum effort or money into the home to make a sale, you could still benefit from avoiding the as-is designation in the listing. Let buyers come and make offers, see how you feel, and go ahead and turn down requests to make repairs if you feel it is the right choice.

Most homeowners should avoid starting off a sale with as-is. However, there are certain situations where selling as-is really is desirable. In these cases, you will need to know how to sell a home as-is. These reasons include:

You really cannot afford to make any repairs: You may be in a financial situation where repairs – any repairs – are just not feasible. If the property has defects and you have no way to repair them, you may have no other choice but to sell as-is.

However, try to keep an open mind and talk to your Realtor before you make a hard decision on selling as-is. Your Realtor may be able to come up with some creative solutions that will allow you to avoid selling as-is, or at least avoid stating it in your listing right from the beginning.

You really cannot handle the stress of a home sale: Sometimes homeowners find themselves in situations where they must sell their home, but they are truly unable to deal with the stress that a drawn-out sales process entails. If you are seriously ill or otherwise incapacitated and do not believe you can deal with the selling process, you may decide that selling as-is makes the most sense.

Again, make sure to explore all your options before making a final decision on selling as-is. If you can get help from friends or family, or if your Realtor offers to take care of all the stressful aspects, you can probably get a better price for your home if you avoid selling as-is.

Financial distress: Sometimes an owner will find themselves in serious financial distress and needs to sell their home immediately in as- is condition.

There are other times selling as-is comes up after an offer is received but before the buyers home inspection takes place. Sometimes in a home sale, the negotiation between a buyer and seller can be arduous. From a seller’s perspective, the thought process is “I just gave the buyer an incredible deal”.

Let the buyer know they are buying the home “as-is” and you are not coming down another dime on the price or making any repairs for any defects discovered. Many sellers having sold homes in the past understand that a home inspection can be a second round of negotiations. Sellers try to head off these unreasonable home inspection requestes before they ever happen.

There are times when a seller has a little bit of money to invest into their property prior to listing it for sale. In this circumstance, it may make sense to do a few improvements prior to listing for sale.

For example: nothing goes further when selling a home than a fresh coat of paint. If you have rooms that need painting or wallpaper that should be removed, doing so can be one of the highest returning investments.

Selling as-is when you can afford to compromise a bit may make some sense. This is something you should discuss with your Realtor. Your Realtor should also be able to point out other ideas or things that should be fixed before putting the home up for sale.