Buying and selling a house is the largest transaction most people make in their lives in terms of importance, complexity, and cost. Because of that, it's often not a logical decision, but an emotional one.

Especially once offers are on the table and the pressure mounts, it's hard to think clearly and objectively during negotiations for such large transactions! Make sure you comprehend the consequences fully before making a choice. Let's dive in!

What is Selling a House As-Is?

Selling a house as-is means that the property is being sold in its current condition, without any repairs or renovations made by the seller. That means all of the deferred maintenance and issues (visible or not) are the responsibility of the buyer upon closing.

This type of sale is attractive to buyers who seek a property to fix up themselves, or who don't have the funds to buy a home in pristine condition. Property rehabilitators, such as ourselves in the Austin area, generally choose these transactions to then renovate with their own crews and/or materials.

As a seller, an as-is transaction comes with its own set of pros and cons, which sellers should be aware of before making a decision.

Advantages of Selling a House As-Is

Simply put, the chief advantages of selling a house as-is (presumably off-market) are that it's fast, easy, and free. Sellers generally lack the means or motivation to make the necessary improvements to the property to take it to the open market.

Selling a house in this manner is often due to homeowner distress - reasons like foreclosure or divorce are common. This also commonly happens with inherited property, especially when the inherited property is in a different city, state, or country than the inheritor.

With that being said, selling as-is doesn't necessarily mean that the house is in poor condition. We often talk to sellers who have kept up with a property well, but view any kind of remodel or large repairs as unfeasible.

Once under contract on an as-is sale, it's usually smooth sailing to close, especially when you work with us. However, there are some cons of as-is sales. This leads us to our next point.

Disadvantages of Selling a House As-Is

The chief disadvantage of selling a house as-is is that open-market price discovery for your property on the MLS won't happen. During COVID, almost every home commanded a premium regardless of condition due to the lack of inventory. That might still be happening depending on your real estate market.

But in reality, that's the exception, not the rule. 2024 housing inventory in Austin-Round Rock MSA has exploded to multiyear highs and properties in poor or older condition are sitting for months and months on the market.

Think about it this way - it already costs a lot of cash to buy a house. Buying a home as-is means spending more cash to make upgrades and repairs. That's out-of-pocket money that most buyers don't have.

In contrast, if the seller completes repairs and restores it to market condition, the repairs/improvements become part of the home price and are therefore rolled into their amortized loan. Effectively, the costs for the buyer are broken up over time.

When buyers save for years to simply own a home, it can take many more years of saving to renovate or make repairs (along with the time, energy, and logistics to do them). Many buyers just aren't willing to do this, and therefore your pool of buyers gets smaller. Fewer buyers, less demand, lower value.

How Much Do You Actually Lose Selling As-Is?

When you're evaluating how much you lose selling a house as-is, pay attention to the sale prices, conditions, and days-on-market of homes around you. Try to find similar homes to yours in size, bedrooms, and location, and take a look at the price per square foot of both updated and as-is homes.

You might figure out it's worth taking the time, money, and effort to go through with repairs and updates after all. It varies between each local market! Compare them and see what's worthwhile and viable for you.

Ultimately, if you're in a seller's market with low inventory, you are likely better off putting your property onto the MLS, regardless of the condition. If you're in a buyer's market and have an older or run down property, you'll likely have a hard time selling it on the open market.

When we work with sellers, we are open and honest about the condition of their homes. While we buy houses as-is with cash, if we truly think they are better off selling on the MLS with a realtor, we tell them that.

Serious Deferred Maintenance

I want to make a point are about serious deferred maintenance. We're talking about a bad roof, foundation issues, rotting exterior, and anything else structural which threatens the habitability of the home if not taken care of immediately.

As I mentioned earlier, buyers are already loaded up with upfront costs when buying a house. Think about the down payment, closing costs, inspection, title policy, and more. For many buyers, this is about all they can bear.

If you throw serious deferred maintenance on top of that equation, their heads just might explode! Most buyers will run, not walk, away from the negotiation when they find out what repairs for big-ticket items like this cost (and can continue to cost, if not fixed properly) and that they need to happen immediately.

Furthermore, when the average buyer sees that the house has a bad roof or foundation issues and the seller has no interest in fixing them, they'll wonder how many other issues the seller is aware of and doesn't want to remedy.

By the way, banks will not lend to buyers for a home that's deemed uninhabitable due to serious repairs like this. That means any buyer who needs a mortgage for your property is immediately out of the buyer pool.

With that said, I understand that for many of you, this is not be a choice - at the end of the day, you have a run-down house without the means to fix it. That's okay!

Concluding Thoughts

Some sellers may find it worthwhile to sell their property as-is. You may not be able to or want to put money, time, and energy into a property. My best advice: take the time to research your local real estate market and make an informed decision.