Triangle Area Real Estate News & Information

Real estate transactions are often fraught with minefields for both buyers and sellers. Purchasing a home in as-is condition is one of those things that is poorly understood, especially for new or inexperienced buyers. Listing a home in as-is condition may be of benefit to the seller, but it’s going to cost in terms of pricing if a Seller chooses to go this route.  Not only are they expressing their unwillingness (or inability) to make repairs, but an as-is sale essentially relieves the seller from both responsibility and liability for the home’s condition.

Because a home listed as-is  may comes at a comparably reduced price, buyers are anxious to take advantage of the deal they think they’re getting. I say “not so fast!” Here are some of the things buyers should consider when contemplating the purchase of an as-is home.

What You See Is What You Get

Houses are usually listed as-is for a reason, so there is all the more need for buyers to use the due diligence period to obtain professional inspections. Because the buyer will essentially receive the property with no guarantee that it is free from problems (minor or major), and the Seller has already gone on record that they aren’t going to negotiate further based on the results of a buyer’s inspections, the necessity of having quality  inspections cannot be overstated. Unfortunately, even the best and most experienced inspectors will not discover every single problem with a property. In that case, the buyer must take into account his or her own tolerance for the unknown. As I pointed out in my earlier article, seller’s disclosures are pretty much worthless. As-is property disclosures tend to be filled with “No Representation” line items, which basically mean the seller claims to have no knowledge of a property’s condition in one or more areas.

Determine Your Risk Tolerance

As a buyer, purchasing an as-is home can be risky (and costly), but it can also be a solid decision. On occasion an “as-is” home can be a  good deal, so I never write them off completely. Each property must be treated on a case-by-case basis, depending on the results of the inspections and the risk tolerance and financial situation of the buyer. Buyers must take extra care to be sure that they understand the risks and are able and willing to make repairs immediately, if necessary.

Foreclosures and short sales are two types of homes that we typically see offered as-is. Of these, bank-owned homes offer a little more leeway in terms of negotiating for repairs. Banks often list foreclosures as-is because they cannot possibly be aware of the conditions of a home—since they have not lived in it and rarely has the asset manager in charge of the home even seen it. In this case, you may be able to negotiate after the inspection but my experience is that the bank generally will refuse.  Nonetheless  sometimes, banks are willing to spend a reasonable amount of money on repairs if it means getting a property off of their books. In contrast, short sales basically leave no room for negotiation. The seller is either financially unable to make repairs or unwilling to pay for repairs that will not benefit them.

Budgeting for Repairs

If a buyer doesn’t have either the cash or the skills to make all types of repairs, it is advisable to avoid an as-is home. If you decide to buy a fixer-upper, or even an as-is home that appears to have no significant problems, be sure that you will be able to set aside enough cash for unexpected major repairs. If you lack the expertise to evaluate the potential repair costs, bring along someone who has construction or restoration experience to professionally evaluate the property.

The bottom line is that working with an experienced real estate agent ensures that you will receive valuable, unbiased information regarding the risks of all properties you might consider. If you’re thinking about buying a home in the Triangle, contact us today for a straight to the point consultation.