MN Divorce & Real Estate: The Impact of Listing "As-Is" on Property Condition
In the realm of real estate, divorce can be a tumultuous chapter in one's life. It often prompts homeowners to make pivotal decisions, such as whether to list their property "as-is." While it may seem like a convenient and hassle-free option in low to high-conflict situations, it's essential to understand the possible outcome of this choice.
In this article, we'll delve into the potential financial pitfalls of listing a property "as-is" and how it can result in significant equity losses.
The allure of "As-Is" - Listing a property "as-is" can be enticing for divorcing couples. It could result in a possible faster listing process, reduced stress for both parties, and eliminates the need to allocate substantial funds for repairs or renovations. However, this seemingly expedient approach can lead to a substantial financial setback.
The Mortgage Loan Hurdle - When listing a property "as-is," it's important to remember that, just like the buyer, the property will need to qualify for a mortgage loan unless the buyer is purchasing with cash. Certain "health and safety" aspects of the property's condition can disqualify it from mortgage approval. These characteristics include:
· Lack of flooring (tile, carpet, wood, etc.)
· An empty or inoperable swimming pool
· A roof in poor condition
· A house in various stages of construction, from gutted interiors to exposed
electrical wiring, or unfinished construction.
The Domino Effect - Here's how the dominoes fall: When a buyer and seller agree on an offer, and the buyer will need a mortgage, an appraiser visits the property to evaluate the property. The appraiser is obliged to report on specific property conditions, which can jeopardize loan approval. The underwriter scrutinizes these "work orders" and won't approve the loan until the items are repaired. This often requires another visit from an appraiser to ensure the repairs have been completed, which in turn can consume more time and more money.
When sellers are unwilling or unable to make the required repairs to make the property "financeable," their only option is to sell to cash-only buyers.
The Consequences - A limited pool of prospective buyers can lead to prolonged days on the market, a potential decrease in home value, and could result in zero negotiating power for the sellers. These factors inevitably impact the amount of equity available to them upon closing.
While listing a property "as-is" may seem like a quick fix in the midst of a divorce, it's crucial to be aware of the financial ramifications. The decision can potentially cost sellers tens of thousands of dollars in lost equity, limited buyer pool, and decreased property value. By considering the option of making minimal repairs mandated by the lender, divorcing homeowners can maximize their equity and possible secure a brighter financial future.
If you have questions and/or wish to schedule an appointment to discuss how Shannon Lindstrom can help you, please call, text or email her at your earliest convenience.
Shannon Lindstrom, Realtor®, CDRE™, MILRES, MRP, VCA
RE/MAX Results
Direct: 612-616-9714
Lindstrom_S@msn.com
Shannon@ShannonLindstromRealtor.com
www.ShannonLindstromRealtor.com
www.ShannonLindstrom.info
www.MinnesotaMilitaryVeteranRealEstateAgent.com
www.MNDivorceRealEstateExpert.com
