Key Factors to Keep in Mind When Listing ‘As-Is’: Safeguarding Your Clients’ Equity


In my recent dealings with divorcing clients, I’ve noticed a growing trend of wanting to list properties “as-is,” regardless of their condition. It’s a decision that can seem appealing, especially in high-conflict situations, where it offers the promise of a quicker listing process, less hassle for both parties, and minimal financial involvement. However, I’d like to shed some light on the potential consequences of this choice, so you can equip yourself with valuable insights when advising your clients.

While listing “as-is” might sound like an easy fix, it can lead to a substantial loss of equity, potentially tens of thousands of dollars or even more. Why? Because a property must meet specific criteria to qualify for a mortgage loan, much like a buyer must meet requirements for approval. Certain “health and safety” aspects of the property’s condition can disqualify it from mortgage approval, creating a serious roadblock.

Some examples of conditions that could hinder mortgage approval include:

  • Absence of flooring (tile, carpet, wood, etc.)
  • An empty or non-functional swimming pool
  • Poorly maintained roof
  • House in various stages of incomplete construction, such as gutted to the studs or exposed electrical systems

When a buyer and seller reach an agreement, and the buyer seeks a mortgage, an appraiser steps in to assess the property. This appraisal includes noting specific property conditions that must be addressed. The underwriter, responsible for loan approval, examines these conditions and insists on their rectification before proceeding. This often involves a follow-up appraisal, leading to additional time and costs—usually borne by the seller.

If sellers decline or are financially unable to make these necessary repairs, they’re limited to cash-only buyers. In the spring of 2023, cash buyers comprised around 25% to 33% of all buyers. This means that sellers relying on this segment are essentially missing out on 66% to 75% of potential buyers.

This restricted buyer pool can result in a longer time on the market, reduced home value, and a weaker negotiating position for sellers. Naturally, these factors have a direct impact on the equity available to sellers upon closing.

Taking the step to address even the minimal repairs mandated by the lender can yield substantial returns. In fact, it could mean tens of thousands of dollars in additional profit—sometimes translating to as much as a $10 profit for every dollar spent on repairs.

It’s crucial for divorcing clients to be fully informed about the potential implications of listing “as-is.” By offering them a clear understanding of these nuances, you’re not just providing sound advice, but also empowering them to make the best decisions for their financial well-being.

Real Estate Categories

Katina Farrell

Katina Farrell

Certified Divorce Real Estate Expert®

Katina Farrell, CDRE® is an experienced Realtor & Managing Broker who specializes in real estate transactions, with expertise as a trained Certified Divorce Real Estate Expert® and a Certified Negotiation Expert. She handles the sale of real property in family law cases as a neutral expert. Schedule a complimentary chat and discover more ways Katina can help you resolve the real estate challenges plaguing your divorce cases.

Call: 720-295-8848


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