How Much Do You Lose Selling a House As-Is In San Francisco Bay Area?
It’s time to sell your home – maybe you need quick cash or have to move for work.
But your home needs work: the paint’s faded, the wallpaper’s peeling, and there are water stains on the ceiling. You lack the time and money for fixes. Then, someone mentions selling as-is.
Now you’re thinking: how does selling as-is affect my finances, and how much money could I lose?
There’s no definitive answer, but one thing’s certain: you likely won’t fetch more than market value.
Let’s explore the pros and cons of selling as is, and your options.
Pros of Selling As-Is
Save Time
Saving time is perhaps the biggest benefit of selling as is.
In a typical home sale, you must enhance your home to attract potential buyers. This could involve updating the exterior, replacing windows, or performing landscaping tasks. This requires time and effort, which you may lack.
Selling your home as is involves listing it for sale and waiting for offers to come in.
In the end, you can sell quickly because the process won’t be drawn out like in a conventional sale, where a discussion of who pays for the repairs is part of the negotiation process.
Avoid Stress
Identifying repairs or upgrades is a process on its own. Then, you find contractors for the job. They bid for the project, ensuring you get the best deal.
But it doesn’t end there. You must oversee the work occasionally to ensure it’s done right.
Afterward, there’s cleaning and staging before showcasing the home to buyers. This means you’ll have to vacate during showings.
Managing all this can be stressful but selling “as is” avoids the hassle.
No Risk or Costs for Renovations and Repairs
In addition to saving time and sparing you the headaches of dealing with renovations, you don’t have to spend a dime. Potential buyers looking into your property already know what they’re getting into.
This means you don’t have to take on the risk of a small repair uncovering larger more expensive issues before putting the house for sale. Further, you don’t have worry about spending money on repairs that you don’t recoup the costs on during the home sale.
Cons of Selling As Is
Receive Fewer Offers
Most first time homeowners are looking for move in ready properties. If you sell your home as it is, people assume they’ll have to fix things, so those buyers won’t be interested.
Also, banks may not want to lend money for a house that needs big repairs. So, buyers who need a loan won’t be interested, unless they can get a special loan from the government called an FHA 203(k) loan.
Your best option is selling to someone who has cash, like real estate investors, people who buy houses to fix and sell, and companies that make cash offers.
Sell Below Market Value
When you sell as is, the buyer accepts everything essentially warranty free. Thus, they need to buy your house at a lower price to factor in the risk and repair value to bring the house up to market standard.
Factors that Affect the Offer Price on As-Is Home Sales
Trying to find out exactly how much money you miss out on when selling as is can be complicated. So, let’s break down the factors that influence buyers in making the final offer for your property.
Type of Buyer
Home buyers have different goals for the property that they are looking to purchase.
Potential buyers seeking a move-in ready property may be deterred by the necessary renovations in an as-is sale. They prefer a home where they can simply unpack, set up, and start their new life hassle-free. While achieving this is possible with an as-is sale, it depends on the current condition of the property.
Investors and property renovators actively seek fixer-uppers. They seek as-is properties below market value to refurbish for rental income or resale at a profit.
These buyers often pay in cash and can close deals quickly, usually within weeks compared to traditional buyers who may take 45 to 60 days. Additionally, cash buyers commonly cover closing expenses.
For example, suppose a property’s post-renovation value is $250,000. A cash buyer estimates $25,000 for repairs and covers the $7,500 closing costs (around 3% of the ARV). Furthermore, there’s no need to pay the standard 6% agent commission.
Though the selling price to a cash buyer may not reach $250,000, sellers save time and money on repairs and fees.
Considering both direct and indirect costs, selling as-is can be advantageous. It eliminates tasks like preparing for the market and associated expenses such as mortgage, agent fees, and legal fees.
Condition of the Property
Depending on your property’s condition, there’s a difference in price between selling it as is versus fixing it up before selling. The better the condition, the smaller the difference.
Properties needing major repairs usually get lower offers because fixing them takes longer and costs more to bring them up to standard.
For investors in real estate, their focus is on making a profit quickly, so they calculate the cost of repairs and the time needed to see if it’s worth it.
If your property needs only minor repairs and you have the time and money, it’s probably better to make those repairs and wait for a buyer if you want to sell for the highest price.
But if you’d rather make money now without investing in repairs, selling for cash may be better. A cash buyer saves you the trouble of fixing the property and covers all the sale costs. Plus, selling as is saves you time compared to repairing, listing, and waiting for a buyer.
Location of the Property
Despite everything, the COVID-19 pandemic caused historic jumps in home prices. Some homeowners in certain areas saw their property values increase by an astronomical 52% in just one year. The lockdowns forced people to stay home, and they realized they needed more space, increasing demand for new homes.
If your property is in a hot seller’s market area, whether you sell it as is or fix it up first won’t matter much. Buyers will rush to grab any property before the price becomes out of reach for them.
For example, consider a property in Overland Park, KS, with an ARV (After Repair Value) of $250,000. With its top-notch public schools and strong job market, it’s ideal for families and currently ranks as the sixth-best place to live in the U.S. Investors see this as valuable because there’s less risk and high demand for the property.
Market Conditions
Prevailing local market conditions can have a significant impact on the price.
As home sellers, you can get the best price if there are more buyers than sellers, otherwise known as a seller’s market. It would matter less to sell right away without making any cosmetic repairs since buyers have fewer options.
When Selling a House As Is, Disclosure is Paramount
Being honest and upfront about the property’s condition is helpful for the seller as it weeds out unserious buyers.
Not revealing issues could lead to legal problems later. Also, buyers may do their own inspection and lose trust if they find out you haven’t been honest.
If you don’t live on the property, it’s hard to know what issues exist.
That’s why it’s a good idea to have a professional inspection before listing. It costs $250-$700 but is worth it. The inspector checks major systems like ventilation and septic.
The inspection would also find mold, asbestos, termites, or lead paint. You can fix these or tell the buyer so they can deal with it if they buy.
If everything’s fine, the inspection report shows the house is healthy. So, you can ask for a high price even if it’s sold as is.
How Much Does It Cost to Sell a House As Is?
When determining your asking price, first you estimate the market price of the house. Afterward, you can roughly calculate the cost of the repairs, especially if you did the pre-listing inspection.
Repair Costs
To further help you, here are repair value ranges depending on the scope of work needed to be done and the size of the house:
- Minor repairs such as repainting works and a bit of landscaping – $25,000-$45,000
- Moderate repairs such as kitchen and bathroom upgrading – $46,000-$75,000
- Major repairs such as foundation, roof, and septic system repair – above $75,000
If you decide to do the repair work yourself, there is no guarantee that you’ll be able to recoup all these upfront investments even when you sell the house for a higher price.
As-is sellers skip these expenses since the house is listed directly on the open market with no work done.
Closing Costs
Depending on the buyer, home sellers may need to pay the closing costs. This is on top of the commissions paid out to real estate agents (6% on average) and includes the following:
- Transfer tax
- Escrow fees
- Homeowners’ association fees
- Lawyer fees
- Property taxes
- Mortgage balance
You can expect to shell out around 1-3% of the sales price to settle all the above.
What Are Your Options When Selling a House As Is?
Real Estate Agent
If you decide to partner with a real estate agent, they’ll likely suggest making minor fixes and upgrades to help showcase the property and boost its selling price.
For less than $5,000, you could freshen up the exterior with a new paint job, improving your home’s overall appeal. It’s also wise to schedule a home inspection to avoid any surprises for you or your agent if the buyer requests one.
In this scenario, let’s assume the listing price is $200,000, and the After Repair Value (ARV) is $275,000. Let’s tally up the costs and determine your net proceeds after completing the transaction with a licensed agent:
- Pre-listing inspection – $700
- Repainting cost – $5,000
- Real estate agent’s commission – $12,000
- Closing costs – $6,000
- Other costs (staging, cleaning, basic yardwork) – $2,450
The total expenses add up to $26,150. Now, the buyer estimated the repair cost to be $75,000 and negotiated down the final sale price to compensate for the work required.
You then end up with $173,850 after selling with an agent.
Cash Buyers
Cash buyers like investors who hold onto properties or flip them are your best choice when you’re selling your home without making any repairs.
They’re not afraid of even the toughest projects and often buy homes that are in bad shape.
Although their cash offers are usually lower than the market value of a house, there’s a higher chance that the sale will go through. Investors don’t have to wait to sell another property or rely on getting financing from a lender. They can close the deal quickly with cash, which saves time.
When you sell a home as is, you can save about $26,150. The only cost to subtract from the $200k is the investor’s profit, which can vary. Assuming a 10% profit, you’d get around $180,000, a bit more than if you sold through an agent.
So, in this scenario, selling as is to a cash buyer doesn’t mean you’re losing out. Not only do you not lose money, but you also don’t have to deal with inspections, closing costs, seller fees, hiring an agent, taking listing photos, organizing open houses, or doing repairs.
Final Thoughts:
How Much Value Do You Lose Selling a House As-Is In San Francisco Bay Area?
There is no exact way of quantifying the value lost when selling your home as is.
Ultimately, the decision comes down to whether you have:
- The funds to afford the repairs and closing fees
- The time and energy to deal with the repairs and showings
While usually you make less money with an as-is sale, you can’t really measure the convenience it offers. When you consider the time saved and stress avoided, the gap isn’t that big.
At We Buy Houses in San Francisco Bay Area, we’ll assist in getting you a fair cash offer for your property. No need to worry—we buy homes as is!
We connect you with a local buyer who specializes in your area’s market conditions, ensuring a fair, market-based offer.
You don’t have to schedule an inspection or plan repairs to sell your home. Just fill out our form with your property address and email!
To reach us, dial (408) 557-7554 and we’ll gladly assist you!
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Author: Saini
My name is Saini, and I founded the We Buy Houses in San Francisco Bay Area team with years of experience in the real estate industry. I have assisted numerous sellers in selling their homes quickly, “AS-IS”, and for a fair price.
He’s been featured in multiple publications including Yahoo Finance, GoBankingRates, LegalZoom, The Mortgage Report, Apartment Therapy, US News and World Report, and SuperMoney among others.