Written by Kelsey Lane
Did you know that all houses in California are technically sold "as is"? It's boilerplate, written into California purchase contracts, which many people don't realize. All this really means is that a buyer is assuming the risk of determining the condition of the property - the buyer accepts the house in the state which they are able to reasonably observe. They can ask for repairs from the seller but the seller is not obligated to comply. If the buyer has a contingency period for inspections, and finds something they are unhappy about, they can still back out of the deal if they can't reach an agreement with the seller. For many years now, in our current market in Silicon Valley and outlying areas, we haven't had the luxury of contingency periods. So, homes that are sold as-is still exchange hands and the price is commensurate to condition.
My thinking is the state of California would rather people offer based on the condition of the house and have deals go through cleaner than have sellers always be responsible for the unpredictability of home repairs. Of course, there are more nuances than this, but those are the basics.
To most consumers, buying a house "as is" means it is a fixer upper in need of deferred maintenance, repairs, or significant remodeling. This is the general terminology used for selling a house as-is - meaning the buyer will become responsible for repairing the house and the seller gets to walk away. In the California Bay Area/ Silicon Valley, selling a house in its current state is rarely is considered by sellers. Most homeowners when contemplating selling a house as-is will assume, and rightly so, that they'll get less for the home sale.
That said, there are a few reasons even in Silicon Valley and the Bay Area, to sell your house As Is - or at least view it as a viable option.
- You can get your home on the market sooner. Sellers who are moving out of the area for work may find this option quite compelling. Also, if you have to hire contractors to perform the prep work, listing can get seriously delayed.
- You can disclose thoroughly and also conduct home, termite, roof, and chimney pre-inspections (and even pool inspections) so that they buyers learn completely everything involved in the house to your knowledge. They go into the sale eyes wide open.
- Also, because your pre-market time is shortened due to not having to complete repairs nor remodeling, your monthly and closing-cost expenses are lowered (e.g. property taxes etc.) based on time prorations.
- Your costs of getting the home ready are significantly reduced. Staging, curb appeal, painting, landscaping, and more can add up to tens of thousands. While you typically would get this money back, many sellers incur debt to get the work done. If paid off at the time of sale, the risk is reduced, yet many won't want to undertake the uncertainty.
- And lastly - and perhaps most importantly - you may be going through a time of distress due to either health or relationship change, etc. and need to not have a publicly presented sale. It's perfectly reasonable to sell your own house in the way that works for you. Even though homes in Silicon Valley are typically painted, staged, and heavily marketed with a lot of traffic coming through open houses, not every homeowner is in the right space to be a match for this method. Maybe a "quiet sale" that is quicker and less public is what you need instead. Make sure to tell your Realtor what works for you and your current lifestyle - just because everyone else is doing it a certain way doesn't mean you must.
Keep in mind
- Some lenders will require certain repairs be done in order for a buyer to get a loan. Check with your local Realtor and lender to find out more regarding your specific situation.
- You may end up receiving 5-25% less for your home than if you presented it pristinely. So, weigh the options and see if the alternative reasons are worth it to you.
- The phrase "As Is" can present a red flag to buyers. In our area, you wouldn't even need to use this terminology in marketing since technically all homes are sold As Is. Let them come see the state your property is in, and they can offer a price based on their own observations.
A good local Realtor can help answer questions about your particular scenario, and home values in your neighborhood based on property condition. We're also available for any questions you have 408-316-0660.
Kelsey Lane has been a Realtor in the Silicon Valley since 2003 and is a Master Certified Negotiation Expert through the Real Estate Negotiation Institute, specializing in listings. She is also coaching certified through the Life Purpose Institute and approaches her real estate business through the eyes of a life coach. Cal-DRE #01390557