Selling a home as-is

Selling a home as-is: What you need to know in 2022

In Texas, there are a few things you need to know about selling your home as-is. Depending on your situation, selling as-is may or may not be the best option for you. In this blog post, we’ll go over the pros and cons of selling as-is in Texas. We’ll also provide you with some tips to help you sell your home as-is. So, if you’re thinking about selling your house in Texas, keep reading!

What does it mean to sell a home as-is?

Selling a house “as-is” in Texas, means the buyer agrees to buy the home in its current condition. An “as-is” home will have no repairs or improvements made to it before closing.

Prepping a home to hit the market can cost a lot of time, energy, and money. Which is why many sellers try to sell their home “as-is” and avoid the hassle of repairs and improvements.

The idea of an as-is sale can appeal to sellers for a lot of reasons. Unfortunately a contract’s “as-is” clause can be confusing for some sellers. There are some grey areas that need consideration. We’ll discuss these throughout this blog post.

How the “as-is” clause in the Texas can be confusing

The “as-is” clause on a standard Texas TREC contract can be confusing for some home-sellers. A buyer might check the box in the contract that says they are purchasing the home as-is. Yet, most buyers are still going to do their due diligence and get the home inspected before closing

In Texas it’s common for buyers to have a 5-10 day “option period”. This gives the buyer an unrestricted right to stop the contract for any reason. The buyer would also get their earnest money back after terminating.

So, if an inspection discovers new problems with the house that the seller won’t repair, the buyer can walk away. Even if the buyer agreed to buy the property “as-is”. It’s common for the buyer to ask for repairs once they are under contract, even if they have agreed to buy the house as-is.

In fact, almost every purchase contract in Texas has the buyer agreeing to buy “as-is” by design. How can that be possible?

Well, lets look at the TREC 1-4 Residential Resale Purchase Agreement. This is most common contract in Texas when buying or selling a home. In the section titled “Acceptance of Property Condition”, there are only two options.  

  1. Accept the home “as-is” 
  2. Enter the repairs or treatments you are requesting the seller repair before closing. 

This is tricky because buyers don’t get the home inspected until AFTER they are under contract. Unless the seller has already disclosed issues with the home, it is tough for buyers to know what repairs to ask for. It is also common for homes to have issues that even the seller may not be aware of. So, there could be defective items that are not listed on the seller’s disclosure.  

Sellers have to understand that buyers are not pro’s when it comes to potential house issues. A buyer may fully intend to buy “as-is” until they uncover certain issues. It’s fair to see why they might change their mind after finding a potentially costly issue.

Cons of pushing for an “as-is” sale as a seller

First off, it can be a big red flag if a seller is demanding a home sale be as-is. Buyers may think that seller’s are hiding defects in the home. A buyer will want to be able to negotiate items discovered during an inspection.

Sellers must remember that even with an “as-is” sale, they still have to disclose everything about the property. Seller’s do this through a seller’s disclosure notice which is very thorough to say the least. Failing to disclose known defects about a property is the #1 one reason a seller’s have legal trouble.

If a home has issues and the buyer becomes aware of them, that can’t hurt the seller’s negotiating position. The buyer is going to want to get a deal on the house if they know are inheriting problems they have to fix.

Here is a breakdown of a few reasons why an as-is sale can hurt a seller in the end:

  • A lower final sale price
  • A smaller pool of buyers willing to take on repairs
  • Increased likelihood of the deal falling apart during the option period
  • Increased days on market

How to be successful selling a home “as-is”

If after reading all this, you are still adamant that you want to sell your house as-is.  Follow these steps to ensure everything runs smoothly. 

  1. Make sure the buyer understands that the home is being sold “as-is”. This means the seller WON’T offer any repairs or credits. Remember, the majority of contracts are technically “as-is” so make sure it’s clear on both sides. 
  2. Disclose, disclose, disclose. If you demand an “as-is” sale and the buyer uncovers a lot of issues, they will lose trust and likely bail on the deal.
  3. Understand how the extent of any damage or issues with your home could affect the buyer.  For example, if the buyer is getting an FHA or VA loan, there are certain conditions that the lender will refuse to issue the loan unless repairs are made. These typically include:
    • Active or conducive conditions to wood destroying insects.
    • Water penetration or mold.
    • Blatant structural (foundation) problems.
    • Missing flooring or essential appliances. The home needs to be “livable” at the time of closing. 
  4. Understand the cost to make these repairs and provide quotes if you can.  This will protect you from a predatory investor telling you the repairs will be more expensive than they actually are. It will also help a buyer work the repairs in their offer and make them more comfortable with the budget
  5. Be patient and ready for some opportunistic investors or tire kickers. People are always on the lookout for great deals and you are going to be a prime candidate for negotiations. Instead of getting frustrated, get educated and be ready for it so you have a strong counter argument.  

    To close everything out. As a broker with 20 years of experience and 1000’s of transactions under my belt, my advice is to not be too abrasive when demanding an “as-is” sale. 

    It’s ok to let the buyer know that you have priced in the current condition of the home and are not looking to renegotiate smaller ticky tacky items after the inspection.  But, every seller should be open minded and understand that there can be issues with their home that they don’t know about. 

    Negotiations are a part of real estate. It’s much better to be under contract and in a position to negotiate rather than scaring off buyers by seeming too obtuse and unwilling to budge.

    The Bottom Line

    Selling your home “as-is” can be a great way to save time and money, but it’s important to understand what that means for you as the seller. The “as-is” clause in the Texas state contract can be confusing, so make sure you consult with an experienced real estate agent before signing anything. There are some potential drawbacks to selling “as-is,” but if you do your homework and price your home correctly, you can be successful. ListingSpark is here to help with all of your real estate needs – contact us today!

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