Weighing the Risks of Listing a Property “As-Is”

At times, some divorcing homeowners choose to sell their properties strictly “as-is,” regardless of condition. Before your clients make that decision, it’s important they understand how it may affect both marketability and net proceeds.

In high-conflict matters, an as-is sale can seem appealing — fewer decisions, minimal cooperation, and no upfront repair costs. However, this approach can significantly reduce equity, sometimes by tens of thousands of dollars.

The key issue is financing. Just as buyers must qualify for a loan, so must the property. Lenders require homes to meet certain minimum health and safety standards. Conditions that often prevent loan approval include:

• Missing or damaged flooring

• An empty or non-functioning pool

• A roof in poor condition

• Exposed wiring or partially completed construction

• Other safety or habitability concerns

  
  

Once a property goes under contract with a financed buyer, the lender orders an appraisal. Appraisers are obligated to note condition concerns that affect safety or habitability. If those items are flagged, the underwriter will withhold loan approval until repairs are completed and verified — typically requiring a second inspection, additional time, and added expense.

If sellers are unwilling or unable to complete lender-required repairs, the buyer pool narrows to cash purchasers only. In many markets, cash buyers represent roughly 25%–35% of transactions. That means eliminating 65%–75% of potential buyers from the outset.

A reduced buyer pool often translates into longer market time, diminished negotiating leverage, and downward pressure on price — all of which directly impact the parties’ equity at closing.

In contrast, addressing only the lender-mandated items can substantially increase return on investment. In some cases, modest repair expenditures can generate significant gains in final sale price.

There are strategic ways to approach this issue that balance cooperation, cost, and maximum value. I’m always available to discuss options for positioning a property to meet lending standards while preserving — and potentially increasing — the equity available to your clients.