I talk to a lot of sellers who wish to sell their home “As-Is”. They usually mean they don’t want to be bothered with repairs. They think that their home is in fine condition, maybe a few problems, but hey, what do you expect? It isn’t like you’re buying a new home!
However, they usually wish to price the home as if it didn’t need any work. The type of work that sellers should have been taking care of all along – we agents call this “deferred maintenance”. Like fixing a leaky faucet. Changing the furnace filter. Replacing failing appliances. (By the way, a really dirty furnace filter can make a buyer do a complete re-evaluation of your home. I mean, if you can’t even change a $.50 filter, what else have you let go?)
Unfortunately, the buyer in today’s market sees “As-Is” and figures one of two things: 1) he is buying a whole raft of repairs and headaches and not only is the price too high for all these headaches, it’s gonna get discounted pretty heavily to account for time and effort in doing all these repairs or 2) the seller is hiding something that he doesn’t want the buyer to find out about.
The bottom line is this: Buyer’s don’t want to pay for the sellers neglect, or laziness, or lack of upkeep. Some buyers even think that the seller should be punished for putting the house on the market in less than marketable condition. (I can’t tell you how many times I’ve heard buyers use that exact phrase!)
The remedy is fairly simple, and while it may cost the you the seller a few bucks, you’ll make it up in a quicker home sale and likely pocket a few extra bucks in the process. Either fix it up or price it lower to take condition into consideration.
Here’s a fairly simple rule of thumb. If you overprice your home for the condition it’s in, you will likely stay on the market long enough to lose more than the amount that you overpriced by. (I know…huh?)
Okay, Let’s assume you overprice by $20,000 (to leave negotiating room). It languishes on the market…one month…two months…and with a steady stream of buyers even. In the third month, a buyer finally makes an offer but it’s $30,000 below asking price. They’re even willing to take it “As Is”. At this point, you’re sick of the whole process, so you take the offer. The buyer does a home inspection and realizes that the furnace and water heater are on their last legs and you have a whole indescribable thing going on inside your electric panel. Now the buyer says he’s going to back out unless you cough up more money. You do so (because now you’re already halfway moved into your new place) and there goes another $10,000.
Whereas if you had just priced it right for the (poor) condition and lack of upkeep, you’d probably have sold it quickly and kept more of your equity in the long run. As I mentioned above, buyers will make you pay for your pricing mis-calculations.
What’s the best way to keep your hard earned equity? Maintain your house. Do a home inspection before putting it on the market and fix what’s found. Prepare it for sale by investing some money in that “deferred maintenance”.
© 2007 Susan Pruden