Jeff’s Carlsbad Blog for First Time Home Buyers

Buying a Home “As Is”

Posted in Due Diligence,House Hunting,Inspections,Insurance by Jeff Dowler on April 30, 2007

At some point in your home searching you are likely to see a listing where it says the home is being sold “as is.” I decided to mention this so you can watch for it, but also so you will give careful consideration to what it means.

1. AS IS generally means the home must be purchased in its current condition, i.e., the seller is not going to do any repairs, should they show up in your visual inspection or in the home inspection. Use of these terms may vary from area to area and may have somewhat different meanings. You may also see “seller will not do any repairs.”

2. AS ISmay have particular implications for the contract, an inspection contingency that buyers often insert in their offer, and other matters. It is smart to talk to your agent to find out what this may mean for you locally. This does not mean, I don’t believe, that you can’t do an inspection (although check on the requirements) but that you will be on the hook for them yourself. Depending on the issues it could raise a question or red flag for your mortgage company and in the appraisal of the property.

3. I would not necessarily assume that AS IS means you CANNOT negotiate some repairs. I have had a few situations where I was able to negotiate some repair work for my buyer clients on AS IS properties. This is more likely in cases where there are safety issues (problemswith the electrical wiring, presence of carbon monoxide from the furnace) or perhaps structural or foundation defects. A lender is not going to want to, and may not, fund a home that has significant structural or similar issues because of the risk to the loan. So do your due diligence.

4. Another matter to consider is insurance. An insurance company may not insure a home that has significant risk factors, or past claims. And if you doget insurance and a problem occurs with the home that is deemed to be a pre-existing or long-term condition, the insurance may not cover the claim. Plus you may lose the policy.

This is NOT to discourage you from looking at homes that need work, andwhere the seller is not willing, or is unable, to make any repairs. However it IS a caution to you to do your investigate work carefully and work closely with your agent when SOLD AS IS pops up. I have also seen a few cases where this was not mentioned up front but arose later in the negotiations, particularly in the case of lower offers.

Finally, in these cases it is even more important for you to do a home inspection so you know what you are getting.


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