How to Sell Your Home ‘As-Is’ | Philadelphia PA

By Jon Miller, Realtor®

If you plan to sell your home you may be wondering how to sell your home ‘as-is’ and if that’s even possible to do. The answer is that it really depends on the situation. The most common situation is a home that’s in need of major repairs or a complete remodel. This type of home is commonly sold ‘as-is’ because the buyers for these homes plan to gut the home down to studs and rebuild. The more common scenario is the typical homeowner who wants to sell ‘as-is’ because they don’t want to negotiate repairs or make any repairs to the home. Oftentimes, these sellers simply want to avoid getting a list of unreasonable demands from a buyer after inspections or from having their sale fall through during inspections. It’s a totally valid concern. It’s less common to be able to sell a typical owner-occupied home ‘as-is’ but there are some strategies that can make it easier which we’ll take a look at below.

How to Sell Your Home ‘As-Is:’ The Fixer-Upper

The most likely buyer for the Fixer-Upper home, and I mean the major Fixer-Upper, is going to be an investor. A lot of the time I come across these homes when they’ve been rented out for a long time or a family member has passed on and left the home to an heir. In Philadelphia, these homes are very rarely purchased by someone who’s going to fix it up for themselves and move-in. There are very few people who are want to purchase a home for themselves who have the knowledge, skill, tools, time, and cash (possibly $50,000+) available to take on one of these projects for themselves. There are some loans that a buyer can get to fix up the home but they’re tougher to find and to successfully navigate. Most buyers just find it easier to buy something that’s move-in ready.

The investors who buy these homes to flip them will typically waive any inspections. They plan to gut the home and rebuild so they don’t care about the condition (for most, the worse the condition the better). Since they don’t typically care about the condition of these homes they are usually purchased ‘as-is’ with no inspections .

How to Sell Your Home ‘As-Is:’ The Typical Home

Negotiating repairs that come up when a buyer does their inspections is stressful and no seller wants their home sale to fall through. Most sellers that I work with ask me if selling ‘as-is’ is an option so they can avoid these headaches and the stress of getting work done on their home before settlement day.

The standard Pennsylvania home sale contract includes the buyer’s right to have your home inspected before they buy your home. They will then have the option to purchase the home ‘as-is,’ ask for repairs and/or money for repairs, or walk away from the purchase and get their deposit money back if they’re unhappy with anything found in the inspection or an agreement on dealing with inspection issues can’t be reached. As the seller you can refuse to negotiate inspection issues and reply to any requests for repairs with a hard “No,” but that just increases the chances that the buyer will walk away and you’ll have to start over with another buyer. You’ll also need to disclose any previously unknown inspection issues to any new potential buyers (and if you don’t want to do that your agent is required to and can lose their real estate license if they don’t).

If you want to try to sell your home ‘as-is’ here are a few things to consider and some strategies that you can use to help make it more likely . . .

  • If you advertise your home as being sold ‘as-is,’ most buyers will automatically assume that there are major issues with the home that need to be repaired (and that they will then be responsible for those repairs). The “take it or leave it” sale puts the buyer at a disadvantage over the average home where the seller would be willing to negotiate issues, especially major issues that were previously unknown. The buyer will have to pay inspection fees then have no option for negotiation. To make the home more compelling and mitigate the buyers’ risk you can offset concerns by offering something in return, usually that means a lower than average price. In this case you’re banking on them being less concerned about inspection issues because they’re getting such a good price on the home.
  • You’ll need to disclose any known issues with your home to any potential buyers before they make an offer. So, one way to avoid potential inspection surprises and to increase your chances of selling your home ‘as-is’ will be to get a pre-listing home inspection and provide the report to potential buyers. By doing this you’ll disclose as much as possible, including issues that you were previously unaware of. You can then factor all of these issues into your asking price to account for them.
  • The best option when selling ‘as-is’ will be to get a home inspection and repair everything on the inspection report. This should leave little, if anything, for a buyer to try to negotiate. If you make the repairs you’ll also want to provide follow-up reports verifying the workmanship of the repairs. This is time consuming and expensive. Since you should repair everything in the inspection report you’ll end up making repairs that you probably wouldn’t have to otherwise since most buyers are ok with less expensive issues that don’t need immediate repair.
  • An issue with pre-listing inspections, with or without making repairs, is that most buyers will still hire their own home inspector. Home inspections have some level of subjectivity since they are the home inspector’s observations and opinions. Your buyers will want an inspection from someone they trust who is working for them and they won’t rely solely on a report written by someone that you’ve hired to inspect the property. There’s also a major difference between reading a report and attending a home inspection. Issues they may not have understood from the report will now have context. But, if you’ve made repairs then the buyer will be more likely to accept the property ‘as-is’ since there shouldn’t be any surprises (but there can be since every inspector is different).

Conclusion

If you want to sell your home ‘as-is’ it really depends on the condition of the property and the likely buyer. It’s common to sell homes ‘as-is’ when homes are in major disrepair and the are being purchased by investors who plan to flip the home. For the typical home seller it’s not common to sell ‘as-is.’ Buyers don’t know the condition of your home until they perform their own inspections and they will want to be able to walk away from the purchase, especially if there are major issues. To increase your chances of selling your home ‘as-is’ the best approach is to get a pre-listing home inspection, make all repairs noted by the inspector, and provide documentation and reports to potential buyers. This will reduce the chances of surprises during the inspection and increase the chances of a buyer accepting the property ‘as-is’ since it will be in very good to excellent condition.

The most common approach for the typical home is to wait for the buyers to perform their inspections and then negotiate any major issues. Yes, the buyer has the option to walk away and previously unknown issues will need to be disclosed to new potential buyers and there’s also a risk of discovering previously unknown issues but the built-in solution in the purchase contract is that these items can then be addressed.

Jon Miller, RealtorJon Miller is a Philadelphia Realtor with Compass Real Estate. Jon has been working with home buyers and sellers in Philadelphia and Montgomery County since 2010.