By Bruce Cathcart
I may have been a bit premature in saying good bye to summer in last month’s article but this month I am officially declaring it OVER! Bring on the cooler mornings and evenings and let us open our windows again!!! And let’s get our Valley’s real estate market moving again. One of my recent articles about “Negotiating the Buyer’s Request for Repairs Process” brought about a flurry of inquiries from readers about whether or not Sellers can sell their home in “as-is” condition and not make any repairs. The short answer of course is “yes”. But a better understanding of the purchase/sale process may help both sellers and buyers to decide on whether or not an as-is sale will work for them.
I sold my first REO (Real Estate Owned by banks) in 1982. I have since sold well over a thousand REO’s and with few exceptions, they were all sold in as-is condition with the seller making no repairs. That may be a bit deceiving though as many of these properties were completely rehabbed prior to being placed on the market and they didn’t really need any repairs… but even those properties that did need repairs were sold in as-is condition. In almost every case these properties were sold UNDER the current market to make up for the less than average condition of the property. Though the prices were attractive the condition and cost of the repairs kept a lot of buyers from being able to purchase these homes. The point here is that these properties were sold UNDER the current market to complete an as-is sale to a limited group of buyers. So the first thing to note about selling your home in as-is condition is that unless your home is in very good condition, plan on discounting the price of your home to compensate for the amount of repairs required and depending upon how bad the condition of your property is, you may be severely limiting the number of buyers capable of buying your home.
But what if your home is in “pretty good” shape, will still qualify for most types of financing and you just don’t want to be bothered by making any repairs… can you do an as-is sale then? Before I answer that question, let’s take a look at the data for the month of September and see how the Coachella Valley real estate sales market is doing.
According to the Desert Area MLS as of 10/1/18 there were 646 pending transactions (homes that went into escrow) of residential properties here in the Coachella Valley in the month of September. That follows our seasonal pattern of being down from the 802 pendings in the previous month (August). This activity is down considerably when compared to the month of September last year when we had 804 pending transactions. In August there were 756 solds (closed escrows) and again, following our seasonal sales pattern, we were down significantly in September with only 708 solds. However, that is actually UP when compared to number of homes sold in September of 2017 when we sold only 668 homes. Once again, September’s sales were able to maintain our lead over last year’s sales with our year to date solds for 2018 at 8,199 compared to last year’s total of 8,096. These statistics show that the Coachella Valley real estate market is NOT going the same way that most Southern California real estate markets are now trending with fewer sales than the year before. To reiterate, last year was a GREAT year for the Coachella Valley Real Estate market. So even if we equal or only come close to last year’s figures, with average sale prices being UP and inventory being DOWN, 2018 would still be a BETTER year for home sales in the Coachella Valley!
This month our inventory of homes for sale went back up with 2,839 homes available on October 1, 2018 compared to 2,621 homes available on September 1, 2018. Last year at this time we had 3,227 homes available for sale. This increase in inventory is seasonal and expected and it is closing the gap between our inventory of homes available for sale at this time of year when compared to last year’s inventory of homes for sale. The decline in pending transactions may account for a portion of this increase in inventory… but we’ll just have to keep an eye on this month’s activity and inventory to see if there is a new trend beginning here.
Technically when you list your home for sale with your trusted real estate professional if it is sold using the standard California Association of Realtors (CAR) form your home is being sold in as-is condition… subject to the Buyer’s inspection of the property and review and approval of the Seller’s disclosures regarding the condition of the property. The typical buyer will spend about 15 minutes looking at your home before writing an offer on it. In that 15 minutes they do not flush toilets, run the appliances, open and close windows, etc. Instead they make their offer at a price that “assumes” that the electrical, plumbing, HVAC and all mechanical systems operate properly. Within 17 days (unless negotiated otherwise) of the acceptance of the offer the buyer will hire a professional home inspector to provide a complete report of the property’s condition. It is usually based upon this report that the buyer will create and submit a “Request for Repairs” to be made by the Seller. In essence the Buyer is saying in this form fix this stuff, or reduce the price of the home, or credit me money for the repairs or I will cancel the transaction. As a Seller you can simply say “no” and not make any repairs insisting upon selling the property in as-is condition. Depending upon the extent of the repairs, some Buyers will stay with the deal, but many will not. This is the risk that a Seller assumes when insisting upon an as-is sale.
Full disclose right up front in the listing remarks that the property is being sold in as-is condition and that the Seller will not make any repairs is the best way to avoid the Buyer submitting a “Request for Repairs”. Knowing this up front some Buyers will wonder what’s wrong with the property and not even bother to look at it while other Buyers will still enter into a purchase agreement oftentimes offering a lower price to protect themselves from the unknown repairs that may be discovered. These Buyers will still make their property inspections and depending upon what they discover will either continue on with the transaction or just cancel. This is another risk that a Seller takes on when insisting on an as-is sale.
As you can see, selling your home in as-is condition can be both complicated and a bit risky, but it can be done. My recommendation is to have this conversation with your trusted real estate professional at the time you are listing your home for sale. They will be able to examine your home and assess your individual situation and give you the proper advice on whether or not an as-is sale is the best way for you to go.
Join me each month this year as we keep a close eye on our Coachella Valley real estate market. If you have a real estate question or concerns please email me at the address below.
Bruce Cathcart is the Broker/Co-Owner of La Quinta Palms Realty, “Your Friendly Professionals” and can be reached by email at or visit his website at www.laquintapalmsrealty.com.