As-Is Home Sale: What to Know to Attract Buyers

For sellers who may need to relocate quickly or don’t have the resources to repair or upgrade a house before listing, an as-is home sale could get you on your way sooner.

Prospective buyers willing to overlook dated decor or other imperfections may not have to outbid other buyers if they’re willing to take on needed improvements themselves. An as-is home sale also allows first-time home buyers faced with high interest rates, high prices, and low inventory to break into the housing market with a home they can fix up over time.

Whether you’re looking to sell or buy a house, here’s what you need to know about an as-is home sale.

What is an as-is home sale?

When selling a home as-is, the owner offers the property in its present condition and doesn’t plan on repairing items revealed during the buyer’s inspection. While an as-is home sale could sound the alarm that the house is a potential money pit, this may not be the case.

For estate sales, an as-is home sale is easier for out-of-town families and avoids the logistical nightmare of flying in to deal with minor repairs or bringing a tired interior up-to-date. “We’d rather sell it for a little bit less because the expense of trying to get here and fix it isn’t going to be worth it,” says Kim Alden, a top real estate agent in the Chicago area whose specialties include foreclosures and investment properties.

You don’t have to sell the entire property as-is. Instead, you can opt for a partial as-is sale in which you specify parts of the premises that won’t be repaired, such as an in-ground pool with surface cracks or a deck with rotting wood. If you are willing to address other problem areas, make sure you state which items are offered as-is.

Sellers: reveal, don’t conceal known defects

Even though buyers are willing to overlook issues in an as-is home sale, they want to know that the house is safe and livable before moving in. The NAR reports that 45% of people who bought new homes didn’t want the hassle of renovations and problems with plumbing or electricity. Buyers are understandably cautious about hidden problems they might encounter with homes being sold as-is.

Just because making repairs isn’t on the table doesn’t mean you can hide major issues from prospective buyers. Real estate disclosure laws in most states require sellers to reveal known problems that could substantially reduce property value or be a significant risk for people. Failing to do so or misrepresenting a material defect could expose you to legal risk. So even if you’re not going to fix your air conditioner that leaks refrigerant, you’ll still have to let the buyer know about this or any other issues you’re aware of.

“You would want to disclose more than less,” says attorney Brett Wasserman. Otherwise you’ll give buyers a reason to ask for money back, and you’d be responsible for repair costs.

Although you should discuss specific disclosure requirements with your real estate agent or attorney, you can also learn more about state regulations in the guide prepared by Nolo, a provider of plain-English legal information and products.

Home inspection is key for buyer’s due diligence

While customarily part of a buyer’s due diligence, a home inspection is even more critical when considering an as-is home sale because the term raises a red flag warning of potential problems. Home inspections examine the structure and systems of the house, including HVAC, plumbing, electrical, roof, foundation, basement, as well as walls, ceilings, floors, windows, and doors.

Don’t expect your buyer to forgo the inspection. Alden advises buyers to hire a licensed home inspector. “Buying as is is not a waiver of a home inspection,” she says. “It’s just saying that you’re going to take the house with any defect the home inspector finds.”

Buyers of as-is homes usually want the seller to remedy health and safety issues such as mold, radon, and electrical and fire hazards. “If someone has a high elevation of radon, they may choose to walk away, or they may ask the seller to mitigate the radon,” Alden notes.

Although you’re not planning to make repairs or lower your price should troubling flaws turn up, Alden says be prepared for buyers to ask for something. And if you’re not open minded, buyers can take their earnest money and run when the contract includes a home inspection contingency.