As-Is Value

What Is As-Is Value?

As-is value is the value of a piece of property in its current state. When a buyer makes an offer on a home or a piece of commercial property, they may negotiate with the seller to have repairs done before purchasing the property. For example, a first-time homebuyer might ask for structural repairs before buying a home.

When you’re buying a home at its as-is value, you’re purchasing it without any repairs or renovations beforehand. That means you’re responsible for making those repairs after you purchase the property.

How Does As-Is Value Relate to Hard Money Loans?

As-is value can play a key role in hard money loans because as-is value property sales are often ideal for people who want to renovate or repair a property then flip it. If you have the experience and resources to make significant repairs to a home, you can secure a hard money loan for the as-is value of the home and turn a larger profit.

Keep in mind that not all hard money loans are related to the as-is value of a property. In many cases, investors take out hard money loans to purchase property at its appraised value. However, you can talk to your realtor about finding as-is value properties if you want to get more bang for your buck.

How As-Is Value Works

The concept of as-is value is relatively simple, but it can be confusing if you’re a new investor or homebuyer. In this section, we’ll take a closer look at how as-is value works and how realtors and sellers figure the as-is value of a home.

Step-by-Step Breakdown

Let’s take a look at a step-by-step breakdown of how the as-is value process works and how you can make an as-is offer on a home:

Step 1:

If you have a realtor, your realtor will start by showing you some properties that match what you’re looking for. If you’re shopping on your own, it’s your job to find properties that fit your investing goals.

Step 2:

Once you find a property you like, you can have it inspected to make sure there are no problems. If there are no problems, you can make an offer on the property.

Step 3:

If there are problems with the property you’re interested in, you can either ask the seller to fix those problems before selling or you can make an offer based on the as-is value of the property.

Step 4:

If the seller accepts your as-is offer, the property will be sold in its current state and you’ll be responsible for repairs and renovations.

While there’s no precise calculation for as-is value, figuring out the as-is value of a home is relatively simple. Here’s how it works.

The as-is value of a home is the current market value of the home without any repairs or renovations. If you discover a specific problem with the property you’re looking at, you can use the cost of that repair to determine the as-is value of the home.

In some cases, investors can turn a bigger profit purchasing as-is value homes. If you have the resources to make repairs yourself or you have an affordable contractor you can work with, it may be more cost-effective to purchase a home at its as-is value then repair it.

Real‑World Scenarios

As-is value plays a key role in many real estate transactions, whether you’re a first-time homebuyer or a real estate investor. Let’s look at some of the real-world scenarios where as-is value comes into play.

First-time homebuyers

If you’re a first-time homebuyer, you’re probably working with a realtor who’s taking care of inspections. When you’re ready to make an offer on the home, your realtor can schedule an inspection to see if there are any problems with the home.

Let’s say the inspector finds plumbing problems in the crawlspace. You could either ask the homeowner to repair those plumbing problems before selling the home, or you make a lower offer on the as-is value of the home and repair the plumbing yourself.

Benefits and Considerations

Purchasing an as-is value property can help you save money and speed up your next real estate transaction, but it’s important to weigh the pros and cons before making any major decisions.

Advantages

One of the biggest advantages of as-is value properties is the faster transaction times. Normally, you’d have to wait for the seller to make repairs before you can purchase a home and start processing the paperwork. With an as-is value property, you can complete your transaction in a fraction of the time.

If you have the means to affordably make repairs and renovations, as-is value homes can be a smart investment.

Drawbacks

Potentially higher repair costs are one of the main drawbacks of as-is value properties. You might purchase a property thinking you need to make $5,000 in repairs, but you might end up losing money if those repairs end up costing $10,000 or $15,000.

While investors typically don’t mind making these repairs after purchasing a property, first-time homebuyers often prefer to move into homes that are ready to live in.

As-Is Value FAQs

What is the as-is value?

The as-is value of a property is the current market value of that property without including additional repairs and renovations. The expectation is that the buyer will make these repairs or renovations after purchasing the home.

Can you get a loan on an as-is property?

While certain types of loans may be unavailable for as-is property, you can get a loan for as-is property. Ask your lender about loans for as-is property to get started.

What are the pros and cons of selling as is?

Selling as is is a great way for sellers to get cash in their pocket as soon as possible, but it can result in a lower final sale price.

What happens if the seller won’t negotiate after an appraisal?

If the seller won’t negotiate with you after an appraisal, you may be forced to back out of the deal and look for another property.

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