How Much Can I Get If I Sell My House As Is?
How Much Will I Walk Away With
Our Short Answer:
The return you walk away with when you sell your house as is, can vary greatly depending on the method by which you sell it, but we recommend home auction for the highest return with the most control for the seller.
You can often get a very decent closing price for your home without spending on lavish upgrades. Let’s examine the potential return and costs of the four most common selling techniques:
- Home Auction
- For sale by owner (FSBO)
- Hiring a realtor
- A quick cash offer
Much of your success in each avenue can depend on what your buyers’ expectations are. Some people will buy your home as an investment, while others are looking for a home to live in.
To work out how much your home will sell for, first you need to estimate what price you would get for your home if it was in tip-top condition, and deduct the estimated costs of repairs. According to Home Buyer the typical range to expect to pay for renovations is $3,990 – $19,832.
Let’s say you have a home that’s worth $150,000; the amount to expect to get for your home if it needs minor repairs is $146,010. If your home needs major repairs the total amount will be $130,168.
There are other costs to consider when selling your home such as paying off a remaining mortgage, Homeowners Association Fees, and fixed taxes.
Holding A Home Auction To Sell A House As Is
Home auction companies do exactly what they suggest – they set up an auction for your house without any requirements, concessions, or extra leg work on your end. No negotiations for repair costs to factor in or any other work. Simple.
In a home auction, there’s no ceiling for bids. At the end of the day, buyers have the potential to bid beyond a property’s market value. Sellers even have the final say if they want to accept the final bid or not.
Before the auction, the seller sets the lowest price that they would be willing to accept. This is called the reserve. The recommended amount is 10-15% below the market value of your home.
If your home’s market value is $150,000, your reserve could be $135,000, which would be the lowest accepted bid for that property.
As always, when selling a house as is, it’s important to remember any outstanding costs that will come out of the closing price, such as remaining mortgage payments, closing costs like transfer tax, Homeowner Association fees, etc.
According to Zillow.com, home owners should expect to pay about 2%-5% of closing cost on the value of their home.
How Much To Expect From A Home Auction:
If you wished to sell a house as is, valued at $150,000 through home auction, it would be reasonable to expect a closing price of around $142,500.
The Cost Of Selling A Home As Is By Owner (FSBO)
Making a choice to sell your own home on your own as is, can drive up the profit by saving a real estate agent’s commission, which can be as much as 5-6% of the value of your home. If your house is valued at $150,000, you could end up paying $9000 of your sale to the agent.
This is in addition to making an outlay on repairs, lawyers costs, taxes and fees. Costs can mount up fast, and you want to avoid the unnecessary ones. If you are seriously considering this option, bare in mind that you need to do all the work that an agent does. That includes negotiations, paperwork and setting a fair price for your home.
Here is the rundown of the costs for For Sale By Owner:
- Home Warranty: Usually both newer and older homes are sold with a home warranty. This is a type of insurance contract that protects the buyer from making an outlay on unexpected repairs.
It covers all the major systems in the home including the appliances, the roof, electrical systems, and heating, ventilation and air conditioning. Sometimes the buyer pays for this, but often it’s the home seller who fits the bill (costs $300-$800). Home warranties are often included in closing costs.
- Closing attorney: A closing attorney is almost always in need to prepare documents for selling your home. Their main role is to manage the financial transactions between buyer and seller. Their costs can be split between the buyer and seller. (Can often range $200-$500).
- Paying the buyer’s agent commission: You may not decide to hire a realtor yourself, but you still need to pay the buyer’s agent commission. This can vary greatly in price.
- Writing a sales contract: You can either buy a boilerplate contract on the internet (in some cases it’s free). Alternatively, if you want to get a real estate lawyer to put one together for you, it will cost you $200 plus.
- Negotiation: If you are selling your own home, you may want to hire an attorney or real estate agent to negotiate the price and the terms of the contract with the buyer. This can easily cost $300 or more.
How Much To Expect If You Sell Your House As Is through For Sale By Owner FSBO:
FSBO is pretty labor intensive but as long as you’re careful, and manage cost, sellers can still do well enough. If you were to sell a home as is, valued at $150,000 through For Sale By Owner (FSBO) you could reasonably expect the high end price to be $134,700.
Hiring A Real Estate Agent To Sell A Home As Is
Realtor’s often take a sales commission of 5-6%. If your home sold for $150,000, that would be somewhere in the ballpark of $7,500-$9000 before other closing costs. In 77% of home sales, the seller pays that commission.
To close a sale with the buyer through a real estate agent, more often than not, you’ll be forced to negotiate repair costs. These can range from 1-3% of the home’s value. Even before selling your home let’s say for the price of $150,000, you could end up spending between $1,500 – $4,500 on repairs.
That said, not all buyers are looking for a move-in ready home. Some see your home as an investment, while others might see this as an ideal and affordable opportunity to move into an area they like.
The majority of buyers will hire a home inspector to find any problems before making an offer. If they find anything major like a roof that needs repairing, there can be weeks or months even of negotiating between the seller performing the major repair or taking the cost of the repair out of the final sale price.
How Much To Expect If You Sell Your House As Is Through A Real Estate Agent:
With all of the factors mentioned above, it would be reasonable to consider that selling a house as is, valued at $150,000 through a real estate agent would be in the ballpark of $136,500.
If You Sell A House As Is Through A Quick Cash Offer Company
“We buy houses for cash fast” companies are typically real estate investment businesses who purchase properties for a bargain price, perform the essential repairs, and then resell them for profit.
You may get a quick cash offer with these companies, but there is always a catch. The majority of cash offer companies will make you an offer that’s 20-50% lower than your home’s market value. That’s a significant decrease in money you walk away with.
Types of Cash Offer Companies:
- Local Cash Buyers: These can either be individual real estate investors or small businesses that will give you a quick cash offer. They’ll typically “fix and flip” homes, alternatively they can have the intent to convert the house into a rental property.
- iBuyers: iBuyers are venture capital-backed businesses, they buy and sell properties online. They apply computer algorithms to estimate what your home is worth.
How Much To Expect If You Sell Your House As Is Through A Cash Offer Company:
Because their goal is to make the most profit, you can reasonably expect to get an offer for a house valued at $150,000 from a cash offer company between $45,000-$75,000.
Other factors in the closing sale
Paying off your mortgage:
This is how much you still owe on your home. You also should consider any home equity loans or “lines of credit against your property”.
If you have owned your home for a longer period of time, or your home has increased in value, the amount that you have to pay to finish your mortgage could be lower than your sales price. This means more money in your pocket.
The opposite could be true too. If you still have a large amount to pay on your mortgage, your equity will be lower, resulting in a less than healthy sized bank balance. Less than 10% of homeowners are in negative equity otherwise known as “being underwater”.
This means owing more money than the value of your home is worth. There are also those homeowners who owe slightly less or close to the entire value of their home.
Typical Closing Costs for the Home Seller
Closing costs are one of the largest expenses for home sellers. As a home seller you should expect to pay 8-10% (which includes agent’s commission) of your home’s sales price on closing costs. This will cost you between $12,000-$15,000.
A lot of that you will spend on agent’s fees. Closing costs is a generic term that also includes the taxes, fees, and charges that are required when closing a sale.
Here are some examples:
- Title Insurance: This protects buyers from financial loss due to flaws in a title of a home. Examples include back taxes, conflicting wills or liens. It normally costs between $500 and $10E0. The seller normally purchases a seperate policy for the buyer.
- Transfer Tax: Evaluated as a percentage of the sale price or the market value of a home that’s transferring ownership from seller to buyer. If a home is selling for $150,000, transfer tax will be $150. It’s always best to make sure your standing with the IRS is crystal clean when trying to sell.
- Escrow fees: Also called a closing fee, it’s either paid to the attorney, the title company for conducting a closing sale. For a mortgage that’s $200,000, the closing fee will be $1897.
- HOA fees: In some neighborhoods, there is a homeowners association (HOA), with prorated membership fees that the home seller needs to pay.
- Attorney fees: These range from $1000-$2000