Having the right information when selling your home can help you make the right decisions. Unfortunately, there’s too much bad advice and misinformation on the internet. While we buy houses fountain Colorado, we aim to offer honest information to help sellers determine the best way to sell their homes.
So, if you’re planning to sell your property, there are two main options: as-is selling or selling the traditional way. Both options are different in many ways, especially as the traditional method often requires cleaning, repairs, upgrades, and more, while the as-is process doesn’t.
In this article, we help you understand the options available and equip you with the information needed to make the right choice for your property. Read on to compare your options to avoid common mistakes.
Comparing Your Options: Traditional Vs. As-Is Property Sale
1. Selling fees
Selling your property the traditional way often attracts a number of selling fees. Usually, these fees will be deducted from the final sale amount, thus further reducing your take-home sale price. Some of the fees you can expect to pay when selling your property the traditional way include the following;
Realtor commission: This is a percentage of the total sale amount paid to the realtor for overseeing the sale process. In most cases, realtors can charge up to 7% or more of the total sale. This amount is deducted from the sale price before it is remitted to you.
Holding costs: Homeowners are responsible for all property taxes and cover costs during the closing process. Keep in mind that the closing process could take anywhere between 60 and 90 days. These costs are considered “holding costs.” They are to be paid by the seller while the buyer perfects their side of the transaction.
Other costs: Homeowners selling the traditional way may incur additional costs, often including title insurance, taxes, and more. These costs can further bite into the final sale price and reduce their overall profit.
As-Is sellers face lower selling fees compared to those selling the traditional way. For as-is sellers, costs and fees like transfer taxes and title insurance will be paid. However, they can eliminate huge costs like holding fees and realtor commissions. Holding fees are eliminated because the sale can often be completed in as little as 3 to 7 days.
2. Repair costs
The traditional sale process will often attract interest from homebuyers who are financed by a bank or other mortgage lending institutions. This interest often comes with an inspection to ascertain the property’s status. Such inspections often detect damages and may demand repairs to bring the property up to standard.
Property owners may also be encouraged to invest in a renovation or remodel to make the property more attractive to buyers. Such repairs and renovations can cost anywhere between $10,000 and $50,000, depending on the damages and repair needs.
One of the biggest advantages of selling your property “as-is” is the cost-saving on property improvement. Home sellers, in this case, do not have to worry about cleaning the property, fixing problems, or even updating it. They can sell in its current condition and save themselves from the renovation or remodeling costs.
3. Financing issues
Selling property the traditional way means buyers and their lenders must agree that the home is worth the offer proposed by the buyer. This means the lender may choose not to finance the property if the lender has agreed to an amount higher than their valuation.
This development can halt the sale process, especially when the lender backs out due to a high price demand. It can further prolong the time required to sell the house, making the process more frustrating.
In as-is selling condition, the buyer and seller can agree on a price and proceed with the title transfer without financing contingencies. The lack of financing bottlenecks makes the as-is sale process faster.
4. Deal closing time
As stated earlier, selling a home the traditional way can take 60 to 90 days or more for the deal to be closed. The seller, during this time, accrues additional debt that would be paid out of the sale price.
Selling your property as-is offers the flexibility to close the deal in as little time as possible. Most as-is buyers can close the deal in 3 to 7 days and may offer sellers the flexibility to choose their own closing date to accommodate their needs.
The traditional sale offer is often garnished with a few fees that ultimately reduce the total amount earned from the sale. For example, the total amount made from the sale will be minus the holding costs, repairs and renovation costs, closing fees, title insurance, transfer taxes, and financing contingencies.
Property owners can make much more from their sales when they sell as-is. They can negotiate a favorable price and keep a bigger chunk of it minus the transfer taxes and title insurance costs.
Knowing the above will help you determine if you have the time and money to sell your property the traditional way or not.