Property Condition and Listing “As-Is”

September 27, 2023

It’s a common temptation for divorcing couples to list their homes “as is,” regardless of the property condition. While it may seem like a convenient option, it’s essential to understand the potential consequences, which could lead to tens of thousands of dollars (or more) in lost equity.

Why is this important to consider:

A property on the market must qualify for a mortgage loan, just like a buyer, meaning the property must meet specific criteria outlined by lenders, lending institutions, or their underwriting guidelines. Several critical factors come into play when determining a property’s eligibility for a mortgage loan:

  • Roof Condition: The roof should be in good condition with no leaks or significant damage. If the roof is nearing the end of its lifespan, the lender may require repairs or replacement.
  • Electrical Systems: The property's electrical systems must meet safety standards, with no exposed wiring, faulty circuits, or outdated wiring that could pose a fire hazard.
  • Plumbing: Plumbing systems should be in good working order, with no major leaks, water damage, or issues with water supply and drainage.
  • Safety Hazards: The property should be free from safety hazards, such as mold, lead-based paint hazards, or asbestos, which could endanger occupants.
  • Swimming Pool: An empty or inoperable swimming pool can affect a property's financeability.
  • Water Damage: Evidence of past or current water damage, such as mold growth or warped flooring, can raise concerns for lenders.
  • Termite infestation: Termite infestation or Section One work notes on the Structural Pest Control Report can impact a property’s eligibility.

Here’s how it works:

When a buyer and seller agree on an offer, and the buyer needs a loan, the underwriter will send an appraiser to vet and appraise the property. The appraiser will call out property conditions like the ones listed above. The underwriter looks at these “callouts" and won’t approve the loan until the issues are resolved.

If the sellers are unwilling or financially unable to make the required repairs to get the property “financeable,” their only option is to sell to cash-only buyers. Cash-only buyers are rare, which limits the pool of potential purchasers for your property.

This limited pool can result in more days on market, decreased home value, and zero negotiating power for the sellers, ultimately impacting the equity available upon closing.

In Conclusion:

As a licensed real estate agent in California with over 19 years of experience and a designation as a Certified Divorce Real Estate Expert (CDRE), my role is to assist couples and their divorce teams, including mediators, attorneys, and financial analysts, in safeguarding the equity in the marital home.

Being a CDRE means I’m also specially trained to offer real estate guidance and support to the courts when they need expert testimony or documentation to support and educate for the cases at hand.

Call me if you’re going through a divorce—or you’re representing someone going through a divorce. I’ll be happy to offer guidance or even take the real estate aspect of the case off your plate.


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DRE #01526679

16780 LARK AVE.

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