Selling as-is home

June 15, 2020 9:40 AM

What’s it like to sell an as-is home? My elderly father in law is staying with us due to no downstairs bedroom or bathroom in his home while he is recuperating. He’s pushing 80 and has lots of health issues so I don’t see things getting easier. His home is in pretty bad shape. Terrible yard, crumbling pool, termite damage, broken garage doors, broken front door...however it is in a very desirable area in southern California.
posted by gryphonlover to Home & Garden (22 answers total)

"As is" has no legal meaning in a California real estate transaction. It's just a heads up that says essentially "if you find things in a tour or during the inspection and you ask me, the owner, to fix them, I will probably say no (but I might say yes)". It doesn't shield the owner from the usual liabilities around disclosures. I think your questions is more: what's it like to sell a fixer upper?
posted by caek at 9:48 AM on June 15, 2020 [2 favorites]

I can't speak to it legally in California but I have purchased an as-is home, fixed it up but realized it had a few dealbreakers for most people (someone had moved the downstairs ceilings up after a fire, resulting in a beautiful airy first floor, but at 5'8" my husband and I each *barely* cleared the door frames upstairs), and then sold the property at a considerable profit (more time related than our renovations) to a developer, in a multiple bid situation where there were also regular families (of short people :)) willing to buy it.

From a simple financial perspective, it's about two things. One is price - if you're willing to drop the price in an area like you're describing, it will sell. The second is getting a listing agent who has connections in the fixer-upper world, whether that's an agent who is gifted at talking about it or an agent who has actual connections with flippers. The second could again result in a lower price, but a quicker sale, if that makes sense...the agent probably has good connections because they help developers make money, so might encourage you downwards in the price, but if speed is the issue that can be really helpful.
posted by warriorqueen at 9:57 AM on June 15, 2020

Definitely do-able. You should get a trusted real estate agent (usually through a referral from someone you know) and talk to them about whether it would be best to do some small cosmetic improvements (which often the real estate brokerage will fund upfront) or just sell it as a fixer.

Expect for it to sell for only 50-70% of the value of a similar house in good condition. You might make more money by “flipping it”, but you need the desire, skill, knowledge, and budget to do so.

Do you have any budget at all for marginal improvements? (Painting, even a deep clean?)

Can you get all of his stuff out?
posted by amaire at 9:59 AM on June 15, 2020 [1 favorite]

I'd try to fix some of that stuff if you can. If you can spend $5k, you can fix the front door and garage door and sell for 2-3X that. Doesn't have to be good stuff, just working stuff. And then fix up the front yard with a mow and some watering, and the back with a mow so everything looks clean.

Anywhere else I'd say bail, but in SoCal you are talking $350k vs like $600-800k for decent condition, so it really makes sense to spend some money to make money.
posted by The_Vegetables at 10:20 AM on June 15, 2020 [5 favorites]

My sister in California planning on retiring made a plan to fix up her house so that when the time came to sell it would be worth more. But then she found out that any investment in her house would be pointless. Whoever buys it will raze her small single family home and either put in a larger single family home or a multi-unit. If your Dad's house is in a desirable location in California it is possible he could get a little bit more for the property if there was no house at all on the lot than he can with a house already there that some developer is going to knock down.

Do some research. If the house will be gutted to studs no matter what you do or demolished there is really no point in wasting money and effort on painting.
posted by Jane the Brown at 10:20 AM on June 15, 2020 [11 favorites]

Definitely ask someone who is really familiar with the neighbourhood about this. My brother bought a house that was a real garbage heap in a nice area, and it was barely less expensive than a decent house? because the land here has a ton of the value in my area, and people really like to buy a lot with a bad house to knock down, subdivide the lot, and develop a duplex (whats the nicer term for that? semi-attached home?) and live in half and sell half here.

If you have similar densification happening, the shape of the house might be less of a big deal. Or if generally people live in the homes they buy in your area, it might be worth you spending a bit on contractors to gain even more during the sell.

The house behind our house was practically destroyed by some renters who became squatters (they like, ripped the exterior doors off, and there was a bunch of spraypainting done inside) and it sold for maybe 1/4th less than we paid for our perfectly nice house. But location is the biggest factor in my city, so the size of lot and proximity to city center is way more important than the actual building here!
posted by euphoria066 at 10:25 AM on June 15, 2020 [2 favorites]

Response by poster: Hi all, thanks so much! Fixing it up is not an option: he won’t spend any money and is paralyzed by decision-making, hence the decrepit condition of the home. (And I had to chuckle about the mowing suggestion-the yard is just dirt and crazy overgrown trees). I didn’t mention the hoarding situation-limited to the garage-lots of askme’s about that :)
posted by gryphonlover at 10:34 AM on June 15, 2020

The people telling you to fix one or two things here are wrong. It's not a good use of your time and it won't affect the value of the home. It works when the house is worth about as much as the land, and the things you fix are the only problems. It doesn't make sense in Southern California when the house is a wreck.

Based on what you've written, there are probably are bigger problems with this house than the very serious surface level problems you've described. That's fine. This is Southern California. The land is worth much, much more than the house.

The point is, spending 10 grand and two months on cosmetic fixes to a house with termite damage that sits on a million dollars of land is ... not sensible and not what your customers are looking for. Find a couple of local realtors. Have them give you their advice about selling to flippers. Take it from there.

Or, if you have the stomach for a 9-24 month project, research the local market and flip it yourself. Or, if the lot size and zoning laws allow it, turn the garage into an ADU or split the home into a fourplex. Or whatever.
posted by caek at 10:44 AM on June 15, 2020 [9 favorites]

My advice is focus on finding a real estate agent who knows the market. When I had to sell a house in an area where I had no local connections, I went on Zillow and looked at who sold the most homes in that specific neighborhood. I called five and interviewed them over the phone. One of my criteria, in my situation, was that I was willing to spend some money to fix things up but the real estate agent would have to do all of the coordination and decision making. I narrowed it down to two and met them at the house to give them a walk around and hear what they thought and I picked one.

Once you have an agent that you trust, they can let you know what, if anything is worth doing and what the return would be. Then you can talk to your dad and see how he feels. If the agent says "spend $20k to get back $50k" and he doesn't have to make any decisions except to consent, then it may work better than it has in the past. Then let the agent take charge of hiring the workmen, and telling them what to do so your dad isn't making any further decisions. Or the agent may confirm that if you just empty the house and clean it, that will be enough.
posted by metahawk at 11:28 AM on June 15, 2020 [3 favorites]

While there are some things you must actually know and disclose, for everything else you just write "buyer to investigate" on the disclosure forms. I just bought in house in Southern California that had sold three times (including to me) in 24 months, and I probably saw that phase 100 times in the three sets of docs. Most of the time it was for stuff we "investigated" by using our eyeballs to verify that yes in fact no one had punched holes in the all the doors, but it's just easier for the selling realtor to put that stock phrase everywhere they legally could.

But yeah, talk to a local realtor. They'll know what buyers are looking for. If everyone is just knocking houses down on 3 lots and putting up 10 units, they'll know. If young people who can't quite afford Silver Lake are buying, and fixing X/Y/Z will net a 200% profit on the money you put it, they'll know that too.

They will also definitely know what you can't just leave as the seller's problem.
posted by sideshow at 11:29 AM on June 15, 2020

Have you considered razing the house completely? It may very well be easier to sell an empty lot, and it completely eliminates any warranty concerns on the decrepit structure.
posted by doomsey at 11:29 AM on June 15, 2020

You should get a trusted real estate agent (usually through a referral from someone you know) and talk to them

this would be my first (and perhaps only) move. We're currently going through something similar with my mom's place; not that it's in terrible shape, we just have no interest in making any work of it. Half an hour with a good experienced agent who knows how to sell houses in that particular neighborhood has helped enormously. Indeed many of the concerns that various friends etc have raised (everybody's a f***ing expert when it comes to real estate) have been quickly and effectively neutralized. The house isn't on the market yet, but when the time comes, we're now confident of how we'll do it.
posted by philip-random at 11:31 AM on June 15, 2020 [2 favorites]

Have them give you their advice about selling to flippers.

Selling to flippers would be the easy thing to do, but it's not going to get you top dollar. In southern CA regular neighborhood, expecting the house to be razed for a larger house (very possible) or split into a legal duplex (extremely unlikely) is fine - you can expect that. But noone is going to give you more than the bare minimum and tearing down a house costs way more than $10k, and will get you nothing.

If you just want to sell it, then put it on the market, but expect to get taken advantage of. You're an easy target.
posted by The_Vegetables at 12:20 PM on June 15, 2020

Also termite damaged homes in SoCal are extremely common - those big tents are real! I had no idea! How much you have is for a professional to decide, and some termite damage doesn't decrease the value of a house that much.
posted by The_Vegetables at 12:23 PM on June 15, 2020

A friend of mine who is a real estate agent has a mantra: "A properly priced house always sells." The corollary is, however, that oftentimes a seller doesn't want to accept the realtor's advice re: the proper price. A good real estate agent can do the research to tell you what that proper price is. Find a good agent, listen to their advice, and you're probably golden.
posted by BlahLaLa at 12:49 PM on June 15, 2020 [2 favorites]

Depending on the area, you might want to list the property as "lot value only". Price it as an empty lot, and also state the condition of the structure as "As in, where is". We bought our small older home in a good area for just a bit over lot value 25 years ago and fixed it up. Most others homes of this age were torn down by the buyers. Perhaps you will attract someone who sees this as an appropriate bargain for themselves.
posted by Midnight Skulker at 1:07 PM on June 15, 2020

This is Southern California we're talking about here, prices bear no relation to the cost of construction because the supply of housing is severely restricted by law. You can probably look up an assessed value in your county's clerk/recorder/assessor website, and it will break out the value by land and "improvements" (i.e., the house). You'll have to use a nearby parcel that was sold recently because due to Prop 13 the assessed value can be way, way lower than the actual value. My guess is that your breakdown will be something like 2/3rds land and 1/3rd house. In really desirable areas the ratio can be 5:1. There is zero point in trying to fix up a house in this situation. There are really only two times when it does make sense: 1. You're in an area where the supply of real estate is not constrained, and the house won't sell at all except at a truly dramatic discount, or 2. One part of the home (say a ghastly kitchen) is so badly in need of renovation that it becomes a sticking point for the whole sale. But neither of those seem to apply.

Stay away from the folks advertising quick cash offers on telephone poles, who will really rip you off. Do the usual thing to sell a home, interview realtors, look at offers, take the best one. You can even look at prices of lots that sold recently in your area on Redfin or Zillow, I bet you will be surprised how little premium there is for pristine or even acceptable condition. There's a very good reason why the average home renovation doesn't even recoup its cost: buyers just don't care, and the ones that care and have the money to spend are going to want it done their way, not yours.
posted by wnissen at 4:59 PM on June 15, 2020 [1 favorite]

From your brief description of the damage, it sounds likely that someone might be able to get a mortgage on it with minimal repair. That’s the standard at which you get something like a normal home price vs. much much less. Nthing to talk to a few realtors and also look at what’s on Redfin/Zillow, remembering that realtor photos are as close to lies as possible - they cropped out the missing doors on my bathroom cabinets and massive drywall holes, taped the broken kitchen faucet in place, someone turned a closet door upside down so it would sorta fit so it looked like the bathroom had a door. My house sold for less than 10% less than the identical house with normal wear and tear next door and appraised above sale price.

Also, negotiated repairs come out of the sale price and your realtor can arrange contractors, definitely ask realtors what work they’d want to do, you don’t have to do all the legwork.
posted by momus_window at 5:45 PM on June 15, 2020 [1 favorite]

We sold my mom’s condo as-is, when we had to move her into memory care. It was a horror. All the carpet was soaked in dog pee, there was a huge crack in a wall, and everything was covered in cigarette smoke. Basically, anyone buying it was going to have to take it down to the studs, disinfect it, fix it up, etc.

We found a realtor who tended to take on tough sells. He said he’d seen worse LOL. Anyway, we priced it to sell, and sell it did. We actually got over asking price for it. We did not warranty anything or agree to any repairs. We were firm on the “as is” part.

FWIW, a house a few doors down from us just sold “as is” too. It was listed as a handyman’s special. So, it’s a lot more common than you think and very do-able.
posted by Thorzdad at 6:27 PM on June 15, 2020

I've never heard of an "as-is" home. That said, there are plenty of places sold where the listing explicitly states that things are in terrible shape and that "all of the value is in the land". I think that as long as all of the disclosures are done properly, you're fine.

Three years ago, I bought a home and property that were in shitty shape. I had it inspected, so I mostly knew what I was getting myself into. Mostly. But what pissed me off to no end (and continues to piss me off three years later) is that the previous owners lied on their disclosures about all sorts of stuff. We're still finding stuff that they clearly knew about but pretended they didn't. I'm not a litigious guy, but I'm always "THIS CLOSE" to filing a lawsuit over this bullshit. All this is to say: If/when you sell, be honest and upfront about the things that are wrong with the home and property. You're legally required to, for one. (Not that the people I bought from seem to have cared about that.)
posted by jdroth at 6:45 PM on June 15, 2020

Since you're in Southern California, you might want to take a look at the Instagram @milliondollarshithole to give you some ideas of the insane prices people will pay for houses that are horrible. Yours may qualify.
posted by BlahLaLa at 7:09 PM on June 15, 2020 [1 favorite]

I do want to add one more thing to my response: sometimes the appraisers for the mortgage must have certain items to count, say, a bathroom as a bathroom for the purpose of the appraisal. We refinanced our house (no cash out, just a better rate) in the middle of bathroom renovation. The appraiser asked me to bolt in the toilet because a bathroom had to have a sink, toilet, and shower. Otherwise it couldn't be used to compare against houses with the same number of bathrooms. The whole thing was a farce, took me 15 minutes to put in the wax ring and tighten the nuts, but it's something to consider. Your real estate agent (who, it stands to mention, is going to gross something at least five, maybe ten grand on this transaction) can help you with that sort of stuff as you prepare to sell so you don't have any last-minute surprises.
posted by wnissen at 9:36 AM on June 18, 2020