- The Washington Times - Wednesday, May 30, 2007

Selling a home “as-is” in the current market is not all that easy. Homes are selling more slowly, so buyers often overlook houses that are not in top-notch condition. However, if you want to sell your less-than-perfect home, it’s not impossible.

The most significant challenge is today’s four-month supply of homes on the market. By contrast, two years ago, the Washington area had just a one-month supply of homes.

At the end of last month, more than 44,000 homes were available. Two years ago, fewer than 14,000 homes were on the market.

At the same time as supply has risen, the demand among buyers has fallen. Sales were down 20 percent in April compared to April 2006. Just 7,500 existing homes were sold in the metropolitan area last month — a dramatic drop from April 2004, when nearly 13,000 homes were sold.

Given these market conditions, what can you expect if you try to sell your home as-is? And what exactly is an as-is property, anyway?

“What you see is what you get,” says David Rathgeber, a Realtor for W.C. & A.N. Miller, Realtors, a Long & Foster company. “When people sell as-is, it just means that they don’t want to monkey around with a buyer coming with a long list of stuff after a home inspection.”

“Just because something is listed as-is doesn’t mean that it’s defective,” says Stephen Israel, president of Buyer’s Edge, a real estate company that works exclusively with buyers.

“Our general perspective is that there’s a very big difference between an as-is sale and a house that has a lot of defects,” Mr. Israel says. “There are lots of good reasons why a seller may want to sell a property as-is.”

Sometimes a seller’s age, health or finances make it difficult to improve the home before it goes on the market. Some sellers reside in a different location because of a job transfer and are unable to make changes to the home.

Perhaps a bank owns the property as the result of a foreclosure. Most banks want to get property off their hands as quickly as possible, so they aren’t interested in major renovation projects.

In 2006, a member of Del Ray Baptist Church donated her duplex in the Del Ray neighborhood of Alexandria to the church. Because the property was not needed for church operations, Del Ray Baptist decided to sell the home.

Before listing the property as-is, the church made some modest improvements to the home to make it more presentable.

“It wasn’t the type of property that was worth major renovation,” says Cleta Malone, facility manager at the church. “We figured the person who would buy it would probably gut it out anyway, and it wasn’t going to do any good to put $100,000 into it because of its condition.”

Despite the as-is label, the duplex sold five days after it was put on the market for a value comparable to homes in the Del Ray neighborhood.

Not everyone is enthusiastic about a home that needs a lot of work, however. Just seeing the phrase as-is in a home listing could turn away a lot of buyers — even if the property doesn’t need extensive work.

For this reason, Mr. Rathgeber recommends that sellers do not call their property as-is when they list it. Rather, they should “raise that with buyers or perspective buyers at contract time once there’s an offer being negotiated,” he says.

“When an as-is listing is the seller’s idea, then the buyer wonders if the seller is trying to hide something. They think, ‘Is there something going on here?’ Buyers worry about everything,” Mr. Rathgeber says.

Mr. Rathgeber suggests that incentives such as a home warranty can make an as-is property more attractive to potential buyers.

A home warranty typically is a one-year service contract that covers major systems such as the air conditioning and furnace, appliances and plumbing for unexpected repairs needed because of normal wear and tear. Such contracts typically cost about $400.

Mr. Rathgeber also suggests offering the buyer a small sum of money, perhaps $500 to $1,000, to take care of smaller things that need to be fixed in the home.

Some buyers are interested in as-is properties because they see potential for profit or because they possess sufficient home-improvement skills to improve the home’s value.

“Especially when things are listed as-is, it can turn some buyers off, which may provide an opportunity for those who are more savvy,” Mr. Israel says.

In 2003, Noreen Clancy bought a row house in Southeast Washington that was sold as-is because it was a Housing and Urban Development (HUD) foreclosure.

Miss Clancy chose the property because it was more affordable and because she could use the money she saved to renovate the property to her liking.

“I was interesting in lending my own design ideas into it rather than living with somebody else’s,” Miss Clancy says.

That year, an identical, newly renovated home across the street from Miss Clancy’s sold for $150,000 more than she paid for her home.

Mr. Israel says buyers shouldn’t ignore an as-is listing.

“Our advice is that buyers should be interested in all the best properties available on the market. Without doing more research, you shouldn’t rule out any property for any reason,” he says.

Mr. Rathgeber says potential buyers of as-is properties should keep their eyes open for current and potential problems with the home.

“Always do a home inspection, even if it’s only for informational purposes,” he says.

Most Realtors will tell a seller it is preferable to make needed repairs to his home before putting it on the market, even if it’s just a matter of painting some interior walls. If that’s not possible, an as-is home will sell if priced correctly.

How much less will a property bring if it is sold as-is?

Mr. Rathgeber predicts that an as-is home in good condition will sell for 1 percent to 3 percent less than comparable homes. A property in bad condition will go for 10 percent to 15 percent less.

Before you decide for certain how to market your home, be sure to consult with a Realtor regarding your state’s disclosure regulations.

Laws in Maryland, Virginia and the District differ concerning how the seller is to disclose or disclaim the condition of a property to potential buyers.

A state disclosure form requires the seller to answer questions about the condition of the home. In a disclaimer form, the seller makes no representations as to the condition of the property.

Mr. Israel notes that even signing the disclaimer does not relieve the seller of the responsibility to disclose material defects of a home.

Mr. Rathgeber points out that after Jan. 1, 2008, the use of disclaimer forms in Virginia will be eliminated and sellers will be required to fill out disclosure forms to comply with state law. Currently, a majority of Northern Virginia sellers opt to provide a disclaimer form over a disclosure form, Mr. Israel says.

Some properties, such as foreclosures and trust sales, are exempt from home disclosure and disclaimer laws because persons knowledgeable about the condition of a home are not available.

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