You are ready to move. You have already picked out your new house, the movers are scheduled, and you don’t want to spend any time – or money – on fixing up the house you are selling. You just want to be done with it.
So just list it “as-is”, right? Let the new buyers choose the carpet they want, paint the walls whatever color they choose, and remodel the kitchen to their liking. All of those items may cost you $30,000 and you can just reduce the price by $30K and let the new buyer pick what they want. And you don’t have to mess with it, right?
Sure, you can do that, but you are going to have to reduce the price by a lot more than $30K.
Buyer Vision
Seldom are home buyers able to picture in their mind your home “as it could be” rather than “as it is”. If the carpet is worn, then they picture living in a home with worn carpet. Ugly paint? Most can’t see past the ugly paint. And when a buyer moves into a new-to-them home, they want the home to be fresh and ready. Most buyers are not able to do a remodel of the home before moving into it, and few want to live in a construction zone of remodeling after they move in. Sure, there are buyers who want a bargain and are willing to go through a remodel, but they are going to want a REAL bargain. They want to save enough money that they can remodel the home and still be less expensive than if they had just purchased it already remodeled. Hence, if it costs $30K to remodel a home, buyers are going to want a MUCH bigger discount than $30K to put up with the inconvenience of remodeling. In our $30K remodel scenario, they may want a $50-$60K discount or more if they will have to spend $30K on a remodel.
Narrowing your pool of buyers
When you list your home “as-is”, you dramatically limit the pool of buyers that will even look at your home. In my experience, the vast majority of buyers won’t even take the time to go see an “as-is” home, despite the potential cost savings. Most want move-in ready homes that look nice, with fresh paint and carpet. Hence the success of home “flippers”.
When you list as-is, you immediately narrow your pool of buyers to people who are looking for a “deal” and the deal has to be a really good deal or they will not take the time to look. Flippers want to be able to remodel the home and still sell it at a tidy profit. Homebuyers want a really good deal if they will take on the time and expense of remodeling it themselves. Either way, the seller must offer a substantial discount when selling a home “as-is”.
Options to selling “as-is”
I often get buyers telling me “we can’t afford to remodel before listing our home. What options do I have?”
All is not lost. While you are far better off to install carpet and fresh paint right before listing your home, even if you need to put it on a credit card or get a short-term loan, there are options available. For example, I can often negotiate a deal to have paint and carpet installed prior to closing, with funds from your closing used to pay the contractors. While this is not an ideal solution since you will still have to give the buyer a substantial discount, it can help with a buyer who doesn’t want to live in a construction zone yet are willing to look past the old paint and carpet.