Selling a house as-is comes with a number of advantages. But usually it also means less proceeds. Now you have to decide whether the perks of not having to spend time, money, and effort in sprucing up your house and doing repairs are enough to compensate for the money you would lose if you sell house as is for cash.
- 1 How much do you lose selling your house as-is for cash?
- 2 What factors affect how much you could lose when selling a house as is?
- 2.1 The Type of Buyer
- 3 Should you do repairs and renovations instead of selling your home as-is for cash?
- 4 To sell or not to sell your house as-is for cash…
How much do you lose selling your house as-is for cash?
Unfortunately, there is no straightforward answer to this question. There is no simple equation available that calculates how much less you’d get when selling your house as-is for cash. It’s mainly because the term “as is” includes a wide range of conditions. It can describe a house that requires lots of repairs and some upgrading to make it move-in ready. It can also describe a typical move-in ready house that owners are selling as-is for cash because they need to move and close as fast as possible.
To get a rough estimate of how much your home will sell for as-is, you can follow these steps:
- Estimate the price you’d get for your house if it was in tip-top condition.
- Deduct the estimated cost of repairs. For example, if your house is worth $175,000 and the repairs cost $10,000, you can expect to get $165,000 for your home.
- You may also have to deduct other costs such as remaining mortgage, fixed taxes, and Homeowners Association fees.
What factors affect how much you could lose when selling a house as is?
As mentioned previously, you can’t expect to get the maximum value for your home when selling it as is. A number of factors come into play that will determine how much offer a buyer makes on this type of home sale.
The Type of Buyer
Expect a different offer price when you sell your house as is to companies that buy houses for cash (investors) versus someone who intends to occupy the house.
1. Buyers who plan to live in the house
This type of buyers usually have a high level of concern with homes being sold as-is. They tend to think a number of potential issues may eventually arise, and they’d rather not take a chance. Most people who buy a home to occupy it prefer a home that is turnkey and move-in ready. For this reason, when you sell your home as is you are also limiting the number of interested buyers. And if someone does place an offer, it usually is lower than your asking price. You can also expect to have less offers for your home.
These buyers are purchasing your home with the end goal of earning profit from it. You can expect investors’ final offer to be influenced by the calculated risk involved and profit margin. But the main factor that affects the offer is the exit strategy of the investors. If an investor intends to purchase and hold your house as a rental property, they usually place a higher offer for it than a house that they intend to fix up and resell.
How much to expect when selling a home as-is for cash (example below):
- Sellers can expect to get, depending on the home’s condition, 75 to 95 percent of the home’s value (after repairs) when selling as is for cash to real estate investors. Plus, they don’t need to pay any closing costs or commission fees when selling to cash home buyers.
- If your house needs $15,000 worth of repair and it’s estimated to sell for 150,000, you’ll be offered $112,500, or 75% of the ARV (after repair value). And the investor will shoulder all closing costs.
How much to expect when selling after completing repairs:
- If you decide to invest $15,000 on repairs before selling your home for $150,000. Your buyer is going to live in the house after closing, and you pay for seller closing costs of $12,000, or 8% of the sales price. Deducting the costs of repairs and closing, you net a sales price of $123,000. Comparing the two scenarios, you lose $10,500 or 7 percent less when you sell your home as is for cash.
The condition of the house
In general, the better the condition of your home, the closer you’ll get to the market value when you sell as-is for cash. On the other hand, if your home needs major repairs you’ll get much lower offers since it will require upfront cash, time, and effort to bring it to a condition similar to other homes in the area.
Contrary to popular belief, selling a house as-is for cash is not just suitable for homes that need lots of repairs. In fact, if your home is in good condition there’s a good chance you’ll only lose less than 5 percent than if you decide to fix up your home and sell it yourself. It may even be a better option since you can sell faster, and you don’t have to go through the trouble of fixing it and putting your home on the market.
The location of your home
Location is very valuable in real estate. If your home is in a desirable location, you’ll receive strong offers regardless of whether you want to sell a house as-is or not. Investors wouldn’t typically mind giving an offer close to the market price because they are confident they can resell it at a good price.
In a strong seller’s market, homeowners are in a very good position selling their homes as-is for cash because the offer price gap between as-is sale and a conventional home sale usually shrinks, if not diminishes completely. When there’s a lack of inventory in the market, buyers can’t afford to be choosy about homes or put in low offers. Moreover, buyers usually dismiss any concerns about buying a house as is.
Should you do repairs and renovations instead of selling your home as-is for cash?
Keep in mind that just because selling your home as-is may leave you with less money on your pocket than a fully renovated house that you should invest in fixing up your home before selling it. You can’t expect to spend $25,000 fixing your bathroom and that automatically increases your home value by the same amount. More often than not, you won’t be able to recoup the entire costs of repairs and renovations.
Since there are renovations that won’t bring in enough returns to break even on the cost, you need to be smart about what home updates to do. This way, you won’t end up spending more than needed to meet your goal. Ask yourself, “Will this renovation make me get more money?” “Would this help me sell my house fast?” If the answer is no, then maybe it’s not worth the hassle and money.
To sell or not to sell your house as-is for cash…
If you’re contemplating, “Am I better off to sell my house for cash?” The answer depends on your situation. If you need to sell your home quickly and wouldn’t mind losing a few thousands of dollars, then it’s a better option for you to sell as-is for cash.
Just keep in mind that…
In general, homeowners who sell their homes as is will receive a lower offer. Factors such as the type of buyer, your home’s location and condition, as well as market conditions all affect how much you would lose when you sell your home as-is for cash.
Nonetheless, if your home is in good condition and is in a desirable location, or in a strong seller’s market, it won’t matter much whether or not you sell home as-is, you can expect to receive good offers. In fact, there’s a good chance you will only lose a few percent in selling your home as-is for cash if your home is in good shape.
If you want to sell your house in Cincinnati as-is for cash, you come to the right place. We buy houses in whatever condition it is in at a fair price. Request your ballpark offer now.