Here are some things you should know about buying “as-is”
1. What kinds of properties are usually sold “as-is”?
Almost every short sale and/or bank-owned property I have seen has been sold “as-is.” The banks make no representations about the house or any of the mechanical, electrical, or structural systems of the property or the appliances (if any) of the house. Also, many estate sales or older homes can be sold “as-is,” and with the common occurrence of it these days, is happening more frequently.
2. Why would something be sold “as-is”?
Well first of all, every buyer out there should know that banks look out for THEMSELVES, first, foremost, and only. By declaring a property to be sold “as-is” they release themselves from any liability of having to abide by our regional sales contract that says that all systems must be in NORMAL WORKING ORDER at the time of settlement. Take it or leave it. “take me as I am, or let me go…” for another buyer!
3. Can we still do a home inspection?
That depends. I always, ALWAYS recommend my buyers do a home inspection. If it’s the biggest investment of your life, you should go into the union with the most information possible, right? So sometimes they’ll tell you that a home inspection may be done “for information purposes only.” Many times, this allows you to retain the right to make the contract contingent on a home inspection…so if the report comes back with more than you bargained for, you have the absolute right to void the contract and get your deposit back.
4. Well, can’t we TRY for money from a bank or seller?
Of course you can. The worst case scenario – they say no. Then you’re right back where you started. I have however seen banks grant some money to a buyer depending on their requests (one of my buyers once got $2k towards a new furnace!)….the asset manager is driven 100% by their bottom line. Getting any money, whatsoever from a bank or seller is the exception, it is definitely NOT the rule.
5. What if I am doing an FHA or VA loan and there are red flags on the appraisal?
Before I answer this question, let me say: I am NOT a lender, underwriter, appraiser, or have any affiliation or inside information about the processing of a government backed loan. However, that said, most banks realize that FHA loans are the most common right now…and they also have a higher standard for appraisals. Things like water damage, mold, code violations, etc will be red flags on an appraisal, and will most likely be a “Lender Required Repair.” That term is important!!! In order for your loan to be approved and funded, any lender required repair will have to be completed PRIOR to closing, otherwise, it’ll be no-go. Hopefully the seller will comply with these requests, and you can proceed to settlement. However, if they are not willing to complete the repairs, you can void the contract.
Each situation is different…there’s always a learning curve with real estate!! That’s why it’s important to use a) someone you trust, and b) someone knowledgeable to serve you and your interests to the best of their abilities. Also, buying “as-is” doesn’t mean it’s a lemon…that’s why a home inspection is important! Feel free to contact me with any other questions!
