How Much Do You Lose Selling a House As-Is In California?

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

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

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

Closing Thoughts: How Much Value Do You Lose Selling a House As-Is In California?