Five Questions You Should Ask Before Buying a Home “as Is”
In a highly competitive housing market, you may be tempted by properties that are being sold “as is”. They are often cheaper than others listed, but when a home is listed “as is”, the seller will not guarantee the condition of the property, make any repairs before closing, or credit the buyer for defects requiring repair. They also don’t have to provide vendor disclosure stating specific problems with the home, though they must disclose matters required by federal and state laws such as lead paint, mold, water damage, and death in the property.
It sounds risky to buyers, and it might be. While a home as is may be cheaper up front, it can be expensive to renovate and you may not know exactly what you’re getting into until the sale is made. Selling “as is” often makes more sense to buyers who are selling or investing in property than to homeowners who need something ready to move in.
Note, however, that “as is” does not always indicate that the property is in poor condition – in some cases, there may be little to no damage to the property. Sellers may list as is because they can’t afford repairs upfront, are in a rush to move before repairs are completed, or simply don’t want to deal with repairs themselves. Before you start selling “as is”, ask a few important questions.
How much of the property is being sold “as is”?
“As is” can be applied to a listing in several ways . In some cases, the entire property is sold as is and the seller will not make any concessions or be obligated to remedy defects for which he would be liable in a normal sale. This list includes:
- Structural defects, including a leaky or damaged roof
- Termite infestation or damage
- Broken HVAC or septic systems
- Mold and fungus
- Asbestos and toxic materials
- Chinese drywall
In other cases, certain parts of the home or property are being sold as is, so the seller is not responsible for the condition or function of things such as fireplaces, freestanding structures (garages and sheds), appliances, swimming pools, and hot tubs.
Obviously, the latter can be less risky, since it’s much easier and cheaper to take apart a broken hot tub or replace a refrigerator than it is to fix major structural damage.
Has the home been inspected and valued?
Selling “as is” does not preclude inspection and appraisal – it simply means that the seller is under no obligation to offer credit or make repairs if the inspection reveals significant deficiencies. You should definitely get an appraisal (usually required if you’re applying for a mortgage) and an as-is inspection of the home to get an idea of what needs to be repaired and how much it will cost on top of the purchase price. .
As a buyer, you will have to pay to inspect the home, but it costs several hundred dollars to know what you are getting into. If the seller does not allow an inspection, it is likely that the seller suspects or knows that something is wrong and does not want the discovery to affect the value of the house. This is a red flag – either get clarification or run away.
It is recommended that a pre-contract inspection be carried out, but you can also include an unforeseen home inspection in your proposal, allowing you to opt-out based on the results of the inspection.
How much will the repair cost (and can I afford it)?
Again, a thorough inspection is critical to understanding what repairs may be needed and calculating how much it will cost you to make your home safe and comfortable. Make a list of the work you expect to do and prioritize it in order of urgency, then get proposals from multiple contractors to set the budget. Make sure you can comfortably afford it over and above the selling price.
Do I have alternative living arrangements just in case?
If the house, as it is, has minimal problems and is ready to move in, great. But if the property is in a state of disrepair, there is a chance that you may not be able to move in as expected, or you may have to leave the house if the house is found to be unsafe or uninhabitable. Finding another place to live is likely to take time and money, so it’s a good idea to have a back-up plan just in case.
Did I do my due diligence?
You should be careful with any home purchase, but there are a few additional guidelines for selling “as is” :
- Review any property-related documentation, including title deeds, deeds, and land records.
- Schedule a termite inspection
- Hire a licensed contractor to assess structural issues
- Communicate regularly with a lawyer and your real estate agent
A house “as is” can be either a worthwhile investment or a serious mistake. Find out as much as you can about what you are buying before signing up.