- The Washington Times - Friday, September 13, 2002

When homes are selling as quickly as they have in the Washington area for the past 18 months, it seems likely that homeowners would be tempted to place their property on the market in "as-is" condition, choosing not to spend money on home improvements.

The theory goes that when sellers control the market, they can pretty much do as they please, with buyers suffering the consequences.

While there are certainly some exceptions, sellers are eager to do what they can to get the most value from their homes. Spending a few hundred dollars to paint and polish can often result in a gain of thousands of dollars at settlement. Not only do sellers want as much as they can get as a matter of pride, but with prices as high as they are, they also need the money when they buy a home to replace the one they're selling.

"While there may be more contracts going through as-is without a home inspection, sellers will still get more money for their home if it is in good condition," says Alana Lasover, a broker with Coldwell Banker Pardoe in Bethesda. "That's always been a fact in our profession, and it's still that way."

According to Realtor Barbara Abeille, also of Coldwell Banker Pardoe in Bethesda, "Good agents are still advising sellers to put things in good shape before they put their home on the market. The homes that sell the quickest and for the most money are the ones that are in good condition.

"Buyers today are stretching over their buying limits as it is to afford a home, especially if there are multiple offers for the property they want," she says. "They are more willing to stretch if a property is in great shape."

In nearly every price range and neighborhood in the Washington region, Realtors report seeing the same amount of as-is homes as always, with perhaps a small increase in some areas of Northern Virginia with older homes and elderly homeowners.

"I've seen a slight increase in the number of as-is homes being put on the market, mostly in North Arlington, Rosemont, Del Ray, Old Town and Falls Church City," says Dolly Riegert, a Realtor with Prudential Carruthers in Alexandria. "Mostly, these are older homes with retirees who can't necessarily handle the work needed to get the home in good condition, or the homes are in areas that are so hot that sellers can sell regardless of what they do.

"One listing I know of needs probably $100,000 worth of work, a true 'handyman special,'" she says, "but generally we always recommend that the sellers fix everything like dripping faucets and other items which are checked on a walk-through. It's better for everyone involved."

Consumers are likely to see fewer as-is properties placed on the market in the coming months, as inventory is slowly making its way back up again. The real estate market, as least at the end of August and into September, seems to be returning to a more normal pace.

"The market's a little different than it was in February and March, with more listings than there were then, so sellers are doing everything they can to make their homes competitive," says Ann Grainger, a Realtor with Long & Foster Real Estate in Fairfax Station and Clifton. "All along, though, most sellers, especially those with homes in the higher brackets, were fixing up their homes for sale. These sellers know the value of maintaining their homes and want to do everything they can to make their homes right."

In Rockville, Realtor Neil Bacchus of Weichert Realtors also has noticed a market shift.

"There were probably a few more sellers three or four months ago who were attempting to sell their homes without fixing them," Mr. Bacchus says, "but, for the most part, these homes weren't selling unless the sellers chose to take a big price reduction. So some would take it off the market or fix up the property."

According to Mr. Bacchus, "When the quantity of homes on the market was more limited, sellers were trying to do this more, but we've seen a big increase recently in the number of listings on the market. In January, there were about 1,300 listings, and in August we were up to 1,800.

"It used to be that homes were staying on the market only one to two days, but now they are on the market seven days or more. One thing that has shifted the market a little is that some sellers are choosing to use the 'house-of-choice' clause, which means that their buyers must wait while the sellers find a house they want to buy," he says.

The house-of-choice clause has encouraged more people to put their homes on the market because it is less risky for the sellers, who no longer need to fear selling their home without a property to purchase. They can choose to stay in their current home if they are unable to find anything to buy.

In the Woodbridge area, Realtor Nancy Farischon of Coldwell Banker Residential Brokerage says, "People are still fixing their homes up because they want to get top dollar for their property. There has been a shortage of homes to buy, so almost everything is selling, but only the homes that are in great condition are getting full price. Even with the shortage of listings, the nicest homes sell first and the ones that are in poor condition sell more slowly and for less money."

Carol Temple, a Realtor with Coldwell Banker Residential Brokerage in Arlington, says, "I haven't seen a disproportionate number of as-is properties for sale. This market allows sellers who don't want to be bothered with fixing their home to sell the property anyway, whether it's because it's an estate sale or a home which has been a rental and the owner just doesn't have the appetite to oversee the renovations.

"But most sellers have such pride of ownership that they don't want to sell their house without fixing it up first," she says. "I always tell sellers that people are willing to pay for what they want. Most people don't want to take on a big project, they just want to move into a house and get back to work. I usually persuade the sellers who are hesitating to do the work that they need to [do to] paint and clean and take down old trees because the financial reward is worth it."

From the sellers' point of view, the decision is whether to spend a little money and do a little work and therefore sell the home more quickly and for more money, or to forgo the extra money by taking the easier path and selling the home as is. Buyers have a more difficult time in this market when homes are scarce and prices are high, and may be tempted by a handyman special.

"Generally, it's probably not a great idea for buyers to purchase an as-is property unless they are really confident they will be able to take care of everything themselves," Ms. Riegert says. "But for some buyers, there are so few places available that if the goal is to buy a house in the right location, the sacrifice of buying an as-is property could be worth it.

"As they say, 'Don't be penny-wise and pound-foolish.' Lots of clients know what they can do and know what they can afford to hire someone else to do, and then they can decide if it's worth it to buy a property that needs some work," she says.

"It's rare to find a buyer looking for a fixer-upper," Ms. Abeille says. "Most people are too busy, and besides, I always tell buyers: Mortgage money is cheap money, but fix-up money is an out-of-pocket expense. Plus, there are always hidden expenses possible with an as-is house. It's better to get a house that's more expensive but has had all the work done."

A big concern for buyers considering a home that may need some fine-tuning or even a major overhaul is the home inspection. During the fast-paced market earlier this year when multiple offers were common, many buyers chose to forgo the home inspection contingency clause to make their offer more palatable.

"Most buyers have continued to have home inspections done even during this hot market, but most of them were done for information only rather than as a contingency clause," Mr. Bacchus says. "Now, I'd say they're about half-and-half, some for knowledge only and others with the offer contingent on an inspection."

Mrs. Grainger agrees. "More buyers are choosing in the last few months to have an inspection contingency in their offers. I think they are becoming more particular and protective now that there are more listings available."

According to Ms. Riegert, "In the North Arlington market, where things are fast-paced, listing agents often put a home on the market on a Thursday or Saturday, but won't accept contracts until the following Wednesday. This gives potential buyers a chance to have an inspection done before they make an offer if they want to and can get the permission of the agent and the seller. Basically, the decision to have a home inspection is market-driven. When a property has multiple offers, sometimes sellers won't choose to accept an offer with a home inspection contingency."

In cases of a home offered as is, which means the sellers will not repair or renovate the property, a home inspection should be a crucial step in determining the extent of any problems in the condition of the home.

Even though the sellers will not make the repairs themselves, Realtors say wise buyers will have an inspection done if for no other reason than to estimate the costs of the necessary work required to have the property meet their standards.

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