Selling a House As Is in California
In all of my years of buying and selling houses, I have learned that technically and contractually all houses in California are sold in their As Is Condition and the age of the house really has nothing to do with it.
There is a basic misconception that unless the listing or advertisement to sell the houses says specifically that the house is being sold in its as is condition, it is not.
There is also a misconception that when you sell a house As Is in California that there is no need to make disclosures of any kind regarding known defects. That is certainly NOT the case. With that said, the seller has an obligation to disclose all known defects whether they have lived in the house or not.
The confusion is understandable because most Buyers view the condition of any house through a prism based on its location, age, visual condition and of course the features that we find desirable and that we equate to quality. It also stands to reason that any visual defects will be taken into consideration as part of that evaluation as well.
Let the buyer beware because even the new house, with all of the bells and whistles, has defects whether you can see them or not. It is why 95% of all Buyers order inspections some may even purchase home warranties.
This article is about the decision to strategically sell a house it's As Is condition and sell it accordingly.
There are many reasons that a homeowner would want to list a house in it’s as is condition. In its most basic form it is a statement, an admission that the owner is aware of defects, deferred maintenance or other issues that they are unwilling to do or pay to have corrected. It in most cases refers to the physical condition of the property and its resale value. There is nothing wrong with selling a home in it’s as-is condition as long as in doing so the homeowner also discloses any issues that affect the “value and habitability of the houses as well. Examples of these types of disclosures include;
- Easements (is a new freeway being constructed)
- Use restrictions
- Code Violations (City or County)
- Known Structural or Foundation issues
- Sewer or plumbing issues
- Electrical system issues
- Mold
- Hazardous waste
- Industrial Areas
Most States have disclosure laws that require owners to disclose whatever issues are known at the time of the sale. So just because a seller wants to market a home in it’s as-is condition does not mean that they are absolved from needing to disclose any known major defects.
It is also important to keep in mind that many owners of houses may have never actually have lived in a house or that they lived in the house years ago such as may be the case with a family home that they inherited. As such it also stands to reason that they may not be aware of the condition of the house so selling a house as is in California may be their only cost effective way to dispose of the property.
Most sellers of inherited houses live in distant places making it almost impossible to manage the work that may be required to repair and update a house that is in need of repairs. The cost can be staggering and aside from the financial implications, the practical implications of managing so many and varied projects from a distance is not a homeowners first choice.When you add in the cost of inspections, the interviewing of qualified contractors and the time frames necessary, the benefit may be eaten up quickly by holding costs and a as a practical matter there may be no return on investment.
As a Cash House Buyer in Stockton, Sacramento, Manteca and Modesto CA I have seen first hand the law of diminishing returns in real life as the cost cost to fix a distressed house mount. In my experience, unless you are local and know what you are doing, it is almost always more practical and cost effective to just sell the house in its As Is condition. We have purchased over 75 properties from such owners that were either out of town or out of state absentee owners (either they inherited or they were aging landlords) just looking to liquidate houses that had once been assets in a lucrative portfolio.
For an Owner, selling a home As Is in California, is more importantly a statement that the owner is setting a baseline price based on the condition of the house to offset the cost of any repairs or updates and is selling the house in it’s current As-is condition to reflect the houses current market value. It is really simple, the owner is saying, Ï know that there are issues and repairs needed and the sales price reflects that. It does not mean that the Buyer is precluded from negotiating a different price or more favorable terms. It also does not mean that the seller will be willing to negotiate the price any further. Remember Buyers make offers based on a perceived value and often will make an offer that attempts to realign the listing price with the realities of the market and their abilities.
There are many advantages for homeowners of distressed houses to selling a home in its As Is condition and following the plan can save them thousands of dollars.
- Avoid unknown defects altogether
- Avoid costly repairs
- Avoid costly updates
- Avoid hiring Contractors to make repairs
- Avoid long time frames waiting for repairs
Keep in mind that most homeowners that want to sell a house in its current as is condition usually want a fast sale to get on with their lives. The many reasons and motivation to sell a house as-is is usually thought out and the strategy behind the sale are mostly "time and money" driven. Once we understand that, we understand that selling a house as-is in California is a way to sell a house fast, without delays.
Unfortunately, most owners of distressed houses that are being sold in their As Is Condition also make a very costly mistake. Rather than search out Cash Home Buyers or local real estate investors that will buy a house directly from them, they immediately enlist the services of the first real estate agent they talk to. While the act of interviewing an agent is not the problem, the fact that they tend to hire the first one without the benefit of talking to additional agents and cash house buyers or investors as well, often means a higher cost for the transaction and less money in their pocket.
It is no secret that real estate agents charge a commission of 2.5% to 6% for the sale of the house. Also keep in mind that the seller always pays the commission. In the case of a distressed house that needs a lot of work, it is almost a certainty that the listing will never make it to the MLS, but rather be a very lucrative pocket listing for the real estate agent that will quickly collect both sides of the commission for making one phone call a cash home buyer like Westbrook REI.
Other Consequences of selling a house in California As-Is.
When you consider that 95% of the House Buying Population are going to order at least one home inspection and possibly 3 before they make a final decision, then you begin to understand that the majority of Buyers are not interested in buying a home in it’s as is condition or one that is not in move in ready condition or one that needs lots of repairs or updates.
Let’s be clear, buyers that want houses that are in move in ready condition are going to hedge their bets and will also be willing to pay top of market value for the houses that they buy without the headaches of the unknown.
As a Rule, Banks will NOT Lend on Houses Sold As Is.
There are also other barriers as well. Unless there are special circumstances, Banks are not going to approve loans for houses that they deem as "risky for homeowners" that are not prepared for such a purchase or the following expenses.
in keeping true t that theme, Banks will always order an appraisal and assigned Appraiser definitely going to report back to the bank the houses current As Is condition. It also depends on the type of Loan that the Buyer is seeking and in most cases houses sold A-is will not qualify.
- VA Loans
- Conventional Loans
In the case of a FHA and VA loan, the appraisers also will inspect the condition of the house for defects and as part of the Appraisal will score the house (plus or minus) based on its meeting a set of minimum living conditions or standards outlined in the banks guidelines. For these types of loans homes being sold as is will never qualify.
In the case of a conventional loan, the buyer must convince the bank they have the experience necessary and funds set aside to make the necessary repairs required for such a purchase.
So the rule of thumb is that Banks will not lend for a house that is being sold in its current as-is condition. Banks lend money on houses that they consider habitable without defects or the need for repairs and have little risk.
Finally, selling a house As-Is in California presumes that there will be no inspections, but even the most flexible lenders that are considered "Private" or “Hard Money lenders” will at least want to inspect the property in advance for any issues or defects that make the house a non viable asset.
Cash Buyers Are Your Best Option:
If you are a seller of a home and want to sell it in it As Is condition the size of the potential buyers or market is reduced exclusively to Cash Home Buyers in California.
My name is Peter Westbrook and I am a local Cash House Buyer, a real estate investor located in Stockton, Sacramento, Manteca and Modesto CA. I have been in business for many years and this is one of those topics that is near and dear to my heart.
We buy houses in their current as-is condition all of the time. We buy houses without contingencies for inspections regarding the condition of the house whatsoever.
I fully understand the risk of making such a purchase because it is my business model.
If you need to sell your house fast in California and get the most money from the sale I would suggest that you call me at (209)481-7780 and get a no obligation cash offer. You can also visit my website at http://www.westbrookrei.com/we-buy-houses-sacramento and fill out the short form and I will call you. Either way I think that you will be pleasantly surprised on my ability to make an evaluation and offer to purchase your house.
At "Westbrook REI", we are the best at what we do because we work at it every day. We understand that a commitment to customer and a commitment to our business only happens with hard work. We have years of experience and a plan that we follow. We are a real company with real people that are committed to helping you achieve your goals.
We buy houses in Stockton, Manteca, Modesto, Tracy and Sacramento CA. If you need to sell your house fast, call us... we'd love to make you a fair no-obligation no-hassle offer. You've got nothing to lose, but we'd love to earn your business. :-)
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