If you’ve spent any time looking through property listings, you’ve probably come across the words “as-is” or “sold as-is” in a listing description. For many buyers, these words can conjure up images of properties in dreadful stages of disrepair, and sellers attempting to pass off major issues as minor ones.
Before you write any properties advertising this term off, it’s important to understand the potential benefits along with the risks.
Purchasing a home as-is comes with some risks, but it can also be an opportunity to earn significant price reductions. Here are some basics about this terminology that all homebuyers should understand:
What does “as-is” mean?
Simply put, a home sold as-is means that the owner is selling the home in its current condition. No repairs or improvements will be made, and the seller will not give the buyer credits to fund any repairs.
Is the seller trying to pull a fast one?
Of course, this does not shield a seller from liability of fraud. They may be relieved from any duty to carry out their own inspection for defects, but they are still required to make a disclosure statement of known defects.
However, the process in which this is carried out and what they must disclose varies from each state. For instance, in New York State, a seller can choose not to make a disclosure statement and instead pay a credit of $500 to the buyer at closing.
The reason a seller might do this is that they can’t afford to fix any flaws before selling. The house may also have been through a foreclosure and is now owned by a bank, or the owner has died and left the home to inheritors who have little idea of what could be wrong with it.
Whatever the case, as-is simply means the current owners don’t want to pay for repairs before they pass the home along.
Should you buy a home as-is?
The obvious benefit is cost savings; as-is usually means that the property is going for a low price, and you will likely have an opportunity to negotiate even lower.
Particularly if you’re a good handyman, looking for a home to flip, or just on the hunt for a bargain, this could be just what you’re looking for. But remember: there is still a degree of risk in purchasing an as-is home. There could be a multitude of issues, many hard to detect with an untrained eye.
Therefore, you should absolutely conduct a home inspection before considering the purchase of an as-is property.
Doing a Home Inspection
A home inspection is usually done after an offer has been accepted, and the down payment is in escrow. They typically cost between $300-$500 depending on the size of the home and who you’ve hired for the inspection.
First things first: it is strongly recommended that you include a home inspection contingency into the contract you sign with the seller. The specific language of the contingency will be crucial, so ensure that it allows you to walk free and get your deposit back if the inspection turns up problems you don’t want to address.
Do inspections catch every problem?
It is important to note: some inspectors will typically not include analysis of problems they are not trained for. However, if they suspect a specialized problem, such as termites, chemicals, gases, etc., they can recommend a local specialist for further investigation.
Usually, a buyer will use what was found in the inspection to argue for repairs made by the seller or cash credits. While as-is sellers have already made it clear they won’t be spending money on repairs, a home inspection can still serve other means. And, if you’ve included the home inspection contingency, will save you from getting in over your head.
A NAEBA-Certified Realtor Can Help
If you’re considering buying an as-is property, don’t do it without first performing a home inspection. Make sure that a home inspection contingency is included in any offer you make. You may lose out on the cost of the inspection, but that’s far better than being stuck with a property that becomes a money pit.
Review the list of NEABA real estate agents in your area and get an expert on your side who you can trust to walk you through every step of the buying process.