By admin1
Home’s location
When it comes to offers and home values, we can’t forget real estate’s longtime mantra: location, location, location.
The more desirable your location — in a coveted school district, with a view of the ocean, or on a quiet cul de sac instead of a busy road — the stronger the offer you’ll get, regardless of whether you’re selling as-is or not.
Actual as-is scenario: Dosenberry’s company recently acquired a home in Grand Rapids, Michigan by making an offer close to its market price, primarily because of the home’s location. With an estimated after-repair value of $200,000 with approximately $6,000 to $7,000 in repairs, Dosenberry purchased the home for $175,000.
He estimates that the seller could have secured between $180,000 and $185,000 (after closing costs and commission) if the seller did the work and sold the house on the open market. In this scenario, selling as-is to a cash buyer allowed the seller to net between 2.8% and 5.4% less than if they had completed the work before selling.
“Because the house was in a desirable location, we felt more confident about achieving the ARV,” adds Dosenberry. “If this same house [were] in a worse area, our offer would be significantly less.”
Current market trends
Batterman notes that in a strong seller’s market, the offer price gap typically found between an as-is sale and a conventional sale shrinks — or disappears entirely. When there are more buyers in the market than available homes for sale, buyers can’t afford to be picky about homes or prices.
Recalling the hot pandemic-era seller’s market in her area, Batterman says, “We had so many people purchasing homes that even the as-is [homes] in terrible condition were selling … just because of the lack of inventory.” She adds that no matter if it’s a buyer’s or seller’s market, “people need to move for whatever reason. They have to take whatever they can get.”
In an extreme seller’s market, buyers seem to dismiss any apprehensions about buying a home as-is. Batterman recounted an offer she placed for a client on an as-is home sale. Despite submitting a full-price cash offer and waiving all contingencies, the seller accepted a different offer.
Describing the home, Batterman rattled off a list of areas that required repair: significant water damage, garage doors that didn’t open or shut properly, and gutters that needed replacement. A tree had damaged part of the roof.
There were “some serious repairs there,” she says. “But somebody offered more than full-price cash and must have had no contingency as well because we didn’t get it.”
How much less will you actually make?
To estimate how much less you might earn by selling your home as-is, you’ll need to factor in the cost of repairs and how buyers perceive risk. Here’s a simple way to approach it:
- Start by checking out similar homes in your area. Look at recently sold homes that are similar in size and location but in better condition. This gives you a sense of what your home could sell for if it were fixed up.
- Estimate the cost of repairs. Think about what needs to be done in your property. Maybe the roof needs work, the kitchen is outdated, or the paint is peeling. You don’t need an exact quote, but having ballpark figures helps.
- Factor in a “risk cushion” for the buyer. Most buyers will lower their offer not just to cover repair costs, but to give themselves a buffer in case surprises pop up. This cushion often adds another 10% to 15% discount.
- Expect to make 5% to 30% less. The exact number depends on how much work your house needs and how hot or slow the market is. A well-kept home in a strong market might only see a small dip, while a fixer-upper could see a much steeper cut.
Estimating how much you’ll make in an as-is transaction can help you decide whether it’s worth making a few updates or simply selling the home in its current condition and moving on quickly.
Low-effort alternatives to maximize your sale price
If you’re hesitant to pour money into major renovations but still want to get a better offer than an as-is sale might bring, there are practical middle-ground options. These low-effort strategies can help boost your home’s appeal without draining your time or wallet:
- Tackle minor cosmetic updates: Simple changes like fresh paint, basic landscaping, new light fixtures, or a deep clean can go a long way. These updates are budget-friendly and help make a strong first impression on buyers.
- Use renovation-backed programs or concierge services: Some real estate companies, like Revive or presale concierge services offered by brokerages, front the cost of improvements and get paid back after the sale. It’s a convenient way to make impactful upgrades without paying out of pocket upfront.
- Work with an agent who has cash buyer connections: Experienced agents often have a network of cash buyers looking for properties in any condition. They can help you negotiate a better price, even without major repairs.
These options empower you to take small, smart steps toward a stronger sale price without going all-in on a full renovation.
The bottom line about as-is offers
- Lower offer prices on as-is homes: Sellers typically won’t receive as high of an offer price on an as-is home. Factors, such as the type of buyer making the offer, the home location, the property’s physical state, and market trends, all impact how much less a seller nets from the sale.
- Differences between end buyers and investors: A homebuyer looking to live in the home has different buying criteria than an investor, in that the former isn’t looking to turn a profit on the house. Instead, they’d rather choose a home they can move into without needing much work, while an investor primarily considers their bottom line when making an offer.
- Impact of the home’s physical state on offers: An as-is home in good condition typically garners higher offer pricing, percentage-wise, than a property that requires extensive work. Buyers today prefer turnkey homes over fixer-upper deals.
- Financing challenges for homes with major defects: If there’s substantial damage to the home, including severe deficiencies that “affect the safety, soundness, or structural integrity,” a mortgage lender may not approve a loan on the property. The lender would require repairs before issuing the loan. Otherwise, selling house as is for cash may be a wiser move.
- Influence of location on as-is pricing: Location matters for any home sale, and you can expect to receive a stronger as-is offer if your home’s location has desirable qualities for buyers. Example elements of a great location include a picturesque view, a quiet street, or a high-ranking school district.
If you’d like to skip the repairs, prep work, and open houses, or just need to sell your home fast, requesting a cash offer through HomeLight’s trusted Simple Sale platform can help you find a cash buyer who can close in a matter of days, not months. Investors in the HomeLight network often prefer to buy homes as-is, in almost any condition.
Alternatively, you can consult a top-rated real estate agent with experience in as-is home sales in your area. HomeLight’s agent matching service analyzes over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs.
