Reaching an agreement on much of anything in a contested divorce case can sometimes feel like an act of Congress, including when it comes to listing the house.
After an exhaustive round of negotiations or arguments, one of the parties says, “Fine. I’ll agree to list it, but I’m not lifting one finger or putting a dime into this property. I’ll only sell it as-is.”
And that’s what makes it in the order: “The property located at 123 Main Street shall be listed for sale forthwith. The property shall be sold as-is and no repairs shall be made.”
Then, the sellers make their way into my office, along with the order, and are sure to not let me forget that the order says they do not have to pay a dime or lift a finger — They say, “It’s to be sold ‘as-is’!’”
We can certainly sell a house as-is. In fact, outside of any statutory guidelines, buyers actually can’t force sellers to make repairs to the house. But this will absolutely impact the value of the home and its salability.
Let’s define ‘As-Is’. The California Residential Purchase Agreement, Paragraph 7B (1), Condition of Property at Closing reads “Unless otherwise agreed: The Property shall be delivered “As-Is” in its PRESENT physical condition as of the date of Acceptance” and (2) “Buyer is strongly advised to conduct investigations of the entire property in order to determine its present condition.” Paragraph 8C “Investigation of Property: This Agreement is, as specified in paragraph 3L(3), contingent on buyer’s acceptance of, and any other matter affecting, the Property.” 3L (3) specifies the contingency period timeline.
As a Certified Divorce Real Estate Expert (CDRE), my job is to maximize the value and equity in a house. The cosmetic condition (e.g., cleanliness, condition of paint and carpet, landscaping, decor) substantially impacts the desirability of the home, the number of showings, the amount of offers received, and the quality of those offers.
If inspections are not provided upfront, wear and tear and damage to a property is sometimes not seen; it’s rather discovered through buyer inspections (e.g., damaged roof, sewer lines, ducting, wood-rot, termites, electrical system issues). Even in a seller’s market, buyers will write an offer subject to their own inspections if none are provided upfront! Once they uncover the hidden items, we see buyers either requesting these items get repaired or our sellers crediting the buyers for these repairs through proceeds. Sometimes, buyers ask for a price reduction. If no agreement is reached, the buyers can cancel, and the house is placed back on the market.
This brings me back to the ‘As-is’ clause in the court order. ‘As-Is’ only applies to what is known at the time of acceptance. Any new information discovered after acceptance can be up for renegotiation.
If a seller does not oblige and the house has to go back on the market, keep in mind that the former buyers’ inspections become a new disclosure item for the next buyer. Add to that the stigma of a home that fell out of escrow.
Sellers are infuriated that they may have to forego tens of thousands of dollars in their asking price or as a result of a price reduction because they agreed to sell it ‘as-is.’
While divorcing sellers don’t necessarily have to cough up money out of their pocket to preemptively repair their house, here’s the reality: The value of the house is substantially impacted by its condition. Deferred maintenance and damage in houses of divorce are common — and there’s a price to be paid for that, whether on the front end (before the house is listed) or the back end (as a credit to the buyer, or price reduction).
Bottom Line:
Don’t rely on an estimated net proceeds figure until the sale is complete.
It’s a smart listing strategy to order thorough inspections upfront so the hidden conditions are disclosed and some of them can potentially be addressed before going on the market. And when a property is in move-in condition, it’s easier for buyers to visualize themselves living in the space. The emotional connection can be critical in the decision-making process. Doing upfront inspections, addressing repairs that increase the ROI, and showing the home in move-in condition generates top dollar. Often buyers waive their right to investigate, and their contingencies. This takes negotiations after going into escrow off the table.
Rest assured, I’m committed to maximizing the value and equity in the home. I also have a program that will upfront costs (paint, carpets, yard work, repairs, hauling and even staging) with reimbursement at close. Let's connect.
