I see a great deal of confusion in real estate transactions with the term “as-is.”
Many sellers come to me and say, “I don’t want to do anything to my house. I just want to sell it as-is.” Typically, what they are saying is that their house is older, it may need updates, there may be deferred maintenance, they don’t want to spend a lot of money, they may have even moved out of the house and they think it might just be a teardown, so why do anything at all?
In a real estate transaction, the term “as-is” is actually part of the contract and simply means the property sold must be delivered to the buyer in essentially the same condition it was on the date the contract was signed by both buyer and seller. (The day the contract was ratified.) It also means the seller must remove all personal belongings before the close of escrow.
Q: Aren’t most houses around here sold as-is?
A: Yes, probably 90% (or more) are sold as-is. Most often this is because it has been a seller’s market for the past 11 years and buyers are afraid to ask sellers to make any repairs for fear of having their offer rejected.
There is a practical reason as well not to ask the seller to make any repairs: The seller may want to do it as quickly and cheaply as possible, and that might not be what a buyer wants.
Q: Why should I do anything to my house before I put it on the market if the new owner is just going to come in and either do major renovations or tear it down all together?
A: The simple answer is you don’t have to, but almost always you will net a higher sale price if you make your house look more appealing to potential buyers. Imagine throwing a holiday party at your house. What do you do? You make it look nice – you sweep the driveway, add fresh towels to the bathroom, put fresh flowers on the table, empty the trash bins, etc. When you sell your house, you are having a multimillion-dollar holiday party.
Q: Do fresh paint, new carpet, a yard refresh and staging make a difference?
A: Yes. Unless your house is literally falling down, you will typically see a return of two, three or four times the amount you spend on making the house look presentable. So, if you spend $40,000 sprucing your house up for sale, you’ll probably sell it for $100,000-$150,000 more than you would have had you done nothing. Sometimes even more.
Q: What about fixing things that are broken or need updating?
A: Ask your agent. Ask him or her what are the most important things to do that will appeal to buyers to make them be willing to offer a higher price.
High on the list are obvious deficiencies such as broken windows, overgrown yard, dated paint color, nonfunctioning appliances or plumbing, pet (or other) odors and stained floors or carpets. Remember, your goal is to appeal to today’s buyers who might be looking for different things than you did when you bought the house.
Q: I don’t know who to call to get all this work done.
A: Ask your agent. He or she will have a wealth of knowledge about whom to call, how much it might cost, timelines and more.
Q: How much will it cost, and who pays for it?
A: Most homeowners in this area end up spending between $20,000 and $150,000 to get their houses in “show” condition. I know that is a lot of money, but when you are selling a house for $2 million to $4 million, it is just a drop in the bucket. Sometimes you can use a home equity line of credit or even a personal note for just a few months. Most all fix-up/prep costs are covered by the seller.
Owen Halliday is a longtime Los Altos resident and realtor who manages the Sereno office in downtown Los Altos. Call him at (650) 492-0062 or email [email protected].
