What you see is what you get.
When a seller lists his home for sale “as is,” he’s essentially stepping back, dusting his hands clean and saying, “You can buy the house, but I’m not required to fix anything.” As the buyer, you can (and should) order a home inspection to find out if there are any problems, but by signing the purchase contract you’re agreeing to take it without repairs.
And repairs it will need. After all, houses are sold “as is” for a reason. Some sellers list their homes this way because they don’t want to cough up the money to fix problems they already know about. Other times, homes for sale “as is” are properties the banks have repossessed through foreclosure. In this case, it’s likely the banks are unaware of their condition. Distressed homeowners who are about to lose their home and are trying to achieve a short sale are also known for listing their properties “as is” so they can walk away as quickly as possible.
Whatever the case, there’s always risk involved in buying a home when you can’t negotiate repairs with the seller. This doesn’t mean you should run from any house being sold “as is,” but we suggest you take extra care to understand what you’re signing up for. Before you jump in or run the other way, consider these pros and cons.
- Homes listed for sale “as is” can be a bargain. If the price is right, do some research into the actual repair costs and prioritize which fixes need to be made first. If some can wait until later, it might make the deal worth it.
- If you’re smart about making repairs and installing upgrades, you could make a profit when it comes time to sell. Unsurprisingly, real estate investors make up a majority of “as is” buyers.
- You can’t always be sure of the condition of a home being sold “as is.” A formal inspection will reveal most major problems, but no one can guarantee to uncover all of the issues that might plague a property.
- As long as the seller discloses what he knows about the home’s condition during the transaction, its unlikely you’ll be able to take legal action if any defects or problems appear at a later time.
If you’ve fallen in love with an “as is” home, real estate agents and lawyers advise finding out as much as you can before signing on the dotted line. Aside from ordering a formal home inspection, you can ask neighbors about the home and try to find out if they know of any problems or whether any improvements were made. This information will help you get a clearer picture of what you’re in for, at which point you can decide if you’re up for the challenge of owning a house that needs a little – or a lot – of TLC.
Photography: Edmund Sumner/View/Corbis