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Of course, depending on the home, there could be any number of different issues the owner won’t be addressing before the sale. Of course, the flip side is that the house may have many hidden problems and you may be buying a total money pit. It could be something small and easily replaced, like a deck, or it could be the whole property. At present, lead paint is the only defect included in federal disclosure regulations.
“Other times the house is in good condition, and it’s an estate, so the executor may just want to sell the home and move on with as little hassle as possible,” Messenger says. The Comprehensive Loss Underwriting Exchange (C.L.U.E. Inc.) report will show whether any claims have been made on the property in the past. It’s a good way to learn about any undisclosed condition the owner may be trying to hide or may not be aware of from before they owned the house.
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It can be hard to project exactly how much it will cost to repair the home, which is why you should always get inspections done before buying an "as is" property. As mentioned above, a real estate agent worth their salt can help you come to the best decision about the property in question. They can help ground you when you might be inclined to let emotion get in the way.
This is because, for whatever reason, the seller simply cannot afford the money to fix these issues. It’s also possible that the home was foreclosed on and is now owned by the bank, or the seller has passed away and left the property to relatives with no clue what the home needs. So, regardless of why, the seller is not willing to fix anything up before a sale; they just want to be rid of it. The presence of one or more of these issues in an “as is” home doesn’t mean you can’t or shouldn’t buy it, but it does mean that you might be very limited in your financing options. If the seller’s agent is aware of this up front, they may even have the home listed as “cash offers only” to avoid financing headaches and let any potential buyers know what they should expect. When a real estate agent lists as home to sell “as is,” that doesn’t change the legal rights of the buyer.
What Does it Mean to Buy a Home “As Is”?
Remember, with an as-is property, you’re taking on the burden of any work that is being done. Ask contractors to take a look at the roof, the sewer system, the foundation, and other major systems. You want to make sure you have all of this information at your fingertips so that you can factor any work into your offer price.
Sometimes this leads to not great terms, and sometimes it precludes you from getting financing at all, leaving you to pay all cash or walk away. Some homes may need extreme repairs, which would cancel out any savings you’d get by buying the home. Experts say you should put away 10 – 25% of your budget for repairs when you buy an “as-is” home.
What Buying a House “As Is” Really Means
"As is" homes are a much better proposition for real estate investors. These properties give you an opportunity to buy a fixer-upper at a low cost and flip them quickly. But make sure that you invest in a way that maximizes the chances of returning a profit.
Because since you as the buyer would address any work the property needs, it’s vital to have a thorough property inspection so that you understand the scope and scale of the undertaking. Homes selling as-is are listed at a much lower price because it’s expected there will be some work involved for the buyer. This is especially great if you know you’re going to renovate the house no matter what, Verdel says. If you know you’re putting in a new kitchen, cabinets that are falling apart and a broken oven might not mean much to you.
The home must be safe and sound, and structural issues must be minor and due to normal wear and tear. The sellers may even make certain fixes requested by home buyers, if that’s the only way they can sell the house. A home inspector examines the house from basement to rafters and will point out any problems plaguing the place that may make the buyer want to reconsider the sale. The problems can be current or potentially in the buyer’s future, such as an old roof that may need replacing five years later. There are "As-Is" clauses within the purchase contract of every home and, depending on the different types of homes that are being sold "As-Is", the clause may have different stipulations.
While a buyer still gets time to do inspections, the process for meeting selling contingencies is usually much quicker than it is when there's a list of repairs. Buyers can often negotiate the price on an as-is home more successfully than they might with properties where buyers are willing to make repairs. That's a major perk if you're willing to do the work to fix up a house, but on a budget. "It's important to note that just saying 'as-is' does not provide the seller any extra protection in a legal sense," McDonough says.
But it may pay off, either as an investment or as your next home-sweet-home. Before you decide to take the plunge, let’s take a look at what buying as is really means, and what you need to consider first. Normally when you’re purchasing a home you have the opportunity to make repair requests after the home inspection. If you and the seller are unable to come to terms on what will be fixed and who will pay for it, then you have the option to back out of the deal for low or no penalty. If you think an “as-is” home might be right for you, knowledge is power. Take plenty of time to schedule expert inspections and understand the real condition of the home before you decide to buy.
Someone looking to flip a house might not bat an eye at having to spend thousands on updating a kitchen and will even bid aggressively to win the as-is property. This will allow you to cancel the contract if major issues are discovered during the inspection. You may not necessarily be able to renegotiate the sales price, but you’ll be able to back out of the deal without any penalty if the property needs more work than you are willing or able to take on.
Kristine Gill is a former newspaper reporter who spent five years as a spokesperson for a law enforcement agency. Today she appears on a podcast about great short fiction and hosts a novel writing workshop. Find AgentsIf you don't love your Clever partner agent, you can request to meet with another, or shake hands and go a different direction. We offer this because we're confident you're going to love working with a Clever Partner Agent. Clever’s Concierge Team can help you compare local agents and find the best expert for your search. Clever’s Concierge Team can help you compare local agents and negotiate better rates.
The first thing to know is that there are always additional expenses that come into the picture. Homes listed for sale "as is" are usually priced lower than similar homes in an area. That's because the seller doesn't have to invest in repairs and usually wants to offload the property as soon as possible. "As is" listings are attractive to buyers because they're usually priced lower than other homes on the market.
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