How to make the most money selling an as-is home

Intro

Lets start off by level setting. There is no single "best" way to make the most possible money when you sell. Every home, market, and situation is different. That being said, here's some information you can use to try and get the most money for your unique situation. Before going into the details below about listing your home and getting offers, you need to think about the condition of the home. Issues like a leaky roof may continue to cause damage until the sale, continuing to lower the value of the home. If you fix issues like these immdiatly, it'll prevent futher damage, and you'll get a larger pool of potential buyers if you can get it fixed up just enough to qualify for bank financing. If your house has major issues like this that you can't, or don't want to fix, you may want to read about things to know before selling to flippers to make sure you have realistic expectations of how much it is worth, and start getting offers ASAP to prevent further loss. Even without problems like a leaky roof, a house which sits vaccant for an extended period will start to degrade (plus you're paying utilities, taxes, insurance, and possibly a mortgage), so while you shouldn't feel unnecessarily rushed, you also shouldn't sit on it for months or years without taking action.

The MLS

Especially during a sellers market, using the MLS you'll instantly get the attention of many flippers, landlords, and even first time homebuyers. The wide net that this casts will get you more offers, which is both a good and bad thing.

Pros

  • Lots of offers will likly lead to some higher priced ones
  • Buyers will know there's competition and serios ones will be less likely to low ball
  • The buyers find you, instead of you hunting out multiple off market offers and vetting the people/companies to see if they're legitimate
Cons
  • Have to pay agent fees
  • Lots of low ball, or non-serious offers to sift through
  • May get buyers who try to bait with a high offer and try to keep negotiating lower
  • Many appointments to show the house, and/or open houses

That’s right, you can still go to an agent and get your home listed, no matter what condition its in. In fact, there are a lot of people who have specific searches setup for ‘as-is’ and similar keywords in listings. One big advantage of this (Especially in high priced areas like here in Northern Virginia), you’ll get offers from owner occupants (retail home buyers - see below). If choosing to go this route, the most importaint thing is to get an agent who's not only familar with the area, but specificly has experience with as-is homes and dealing with investors. Since you may end up selling to an investor who isn't using a buyers agent, make sure to ask your listing agent up front before you sign an agreement with them what their commision is in that case. Some agents contracts will say that you pay the entire 5-6% commision no mater what, even if there isn't another agent to split it with. In that case, you won't actually save any money on this fee by selling to an investor. Keep in mind that if there isn't another agent, yours may end up doing more work, so it may be reasonable for them to ask for slightly more than the standard 2.5 - 3% commision that agents usually recieve. There are two main types of buyers you'll end up getting offers from, and you need to keep different things in mind for each

Retail home buyers

People looking to live in the home will often be able to make the higest offer, since they aren't concerned with making a profit on the home, they just want a place to live. These are often first time homebuyers who have time to fix up the house on their own, or slowly upgrade it as they live in it and want to get more house than they otherwise could on their budget. This group of buyers is critical to keep in mind for older homes, or homes that don't have any major issues like mold or water damage that would make them not qualify for financing; but instead are dated or need other cosmetic fixes. To an investor, an old dated home is basically the same as a trashed torn up one since they're going to have to gut it and upgrade everything regardless; but somebody living in it can live with it as is for a while as they upgrade. This is especially true in higher priced markets, or ones with low home availability, since there are some retail home buyers who will want to get into a home, even if it needs a bit of work. However, there are some importaint things to keep in mind when working with retail home buyers:

  • That high offer may come with more contingencies, and that may lead to a lower final sale price in the end. If there's an inspection contingency on the offer, try talking with them to see if there's specific things they're worried about. If you're selling as-is, make it clear what needs fixing/updating up front so that they don't try to back out after finding out about that old roof that needs replacing.
  • There's likely going to be a realtor or two involved who want a commission. If you're selling on the MLS, you'll most likely need a listing agent. And if you sell to a retail home buyer, they're proably going to have a buyers agent, both of which are going to want a commision that comes out of your final sales price.
  • They'll likely need to qualify for financing. Not only will this make it take longer to close, it might kill the whole sale if the bank disqualifies the house.
  • This buyer pool will almost exclusivly come to you if you choose to do an MLS listing

Investors

Investors will often give you lower ofters than retail home buyers, since investors need to make a profit on their purchase. However, this group won't always lead to a lower final price, there are situations where you'll actually make more money selling to them. Additionally, you'll generally be able to sell faster. You may get more money (and convinience) by selling to investors when:

  • You're not listing on the MLS to avoid agent fees. You can take advantage of sites like Craigslist and Facebook marketplace to get the most compeating offers, but more traditional sites like FSBO.com can also be good options. Be aware of your local laws on closing to see if an agent or real estate attorny is required
  • There is major renovation work required. Bigger investors will have dedicated rehab teams, or deals with contractors for recuring work that lets them get jobs done cheaper than a random homeowner. This could allow them to make a higher offer and still make the profit they need on homes that need to be gutted or torn down.
  • You would take a long time to fix it up. "Holding Costs" are the passive expenses for owning a home (mortgage or other loan payments, taxes, utilities). If you're spending weekends DIYing the rennovations, take a careful look at how the holding costs affect your total return. And make sure to calculate in the value of your time as well.
  • The house doesn't qualify for financing. While you might be able to find a retail buyer who's able to buy without financing, those people probably won't have a lot of overlap with ones who want a fixer upper. In this case you need to evaluate if you are able to fix the minimum issues for the house to get bank financing, and if the money in will net more profit in the end (see holding costs above). In these cases where the house is in bad shape, investors may be your only viable option.
  • You make sure the buyer is serious about closing. Beware of excessivly high offers where there are contingencies or very low earnest money. They might just be trying to get the house locked to them to look at, or may just be trying to wholesale it to other investors. If time isn't critical, this isn't necessarily a bad thing. If they back out, you'll keep the earnest money and can then re-list it. Make sure the contract has penalties for them not following through, and don't let them talk you into multiple contract extension without good reason (or favorable terms for you), as they might just be trying to wear you down to take a lower final offer.