If you’re a regular browser of real estate listings, you’ve no doubt seen the words ‘being sold as-is”. Today, we’ll reveal the mystery of the “as is” home, and tell you the implications for Buyers and Sellers.
In a nutshell: when a home is being sold “as is”, it means that the Seller is not making any representations or warranties (in other words, guarantees) about the condition of the property.
Sound scary? Well sometimes it is. An “as-is” home might not have working appliances; there may be rats nesting in the basement, the electricity might not work and there may be mountains of mould behind the walls. The Seller who has decided to sell their home “as is” is selling it in the condition it’s in: they aren’t guaranteeing anything works or conforms to building codes, and they aren’t prepared to fix any deficiencies. What you see is what you get – and what you don’t see, well you get that too.
Of course an “as is” home doesn’t necessarily mean there’s anything wrong with the property. It could simply mean that the property is being sold by a bank or municipality or by a hands-off investor who is not familiar enough with the property to be able to guarantee the condition it is in.
Our advice to you:
Buying the “as is” home:
- Go in with your eyes WIDE OPEN. The Seller isn’t guaranteeing anything, so be prepared for everything.
- Get a home inspection by a qualified inspector. (and no, your brother in law who “knows about these things” won’t suffice).
- Have lots of Cover Your A$$ Money. Some of what’s going on in the “as is” home might need to be fixed right away and it may even impact your ability to get home insurance. Make sure you have a generous budget for unexpected fixes.
- Make sure you understand what is involved in buying a fixer-upper. Expect renovations to cost twice as much as you anticipate and take three times the amount of time estimated. Talk to someone who’s been through it.
- Recognize that your ability to sue the Seller for deficiencies you discover is extremely limited (if at all). An “as is” home can be a risky undertaking.
Selling the “as is” home:
- Don’t bother with a pre-listing home inspection. While we normally recommend getting a home inspection before you list your property (so you know what to fix and expect in advance and can make the report available to potential Buyers), if your home needs a lot of work and you’re selling it “as is”, save the $500 and go away for the weekend. Because you won’t be guaranteeing anything, there’s no need to be fully informed about the house.
- Understand that the pool of Buyers for your home is smaller. First time buyers will likely be spooked away by the “as is” home, as will people looking for a home they can just move into. Recognize that your ideal Buyer is a contractor or is experienced in renovations. But don’t worry, there are plenty of Buyers out there looking for a fixer-upper and we’ve seen some crazy bidding wars this spring for “as-is” homes.
- An “as-is” home doesn’t necessarily remove your obligations to make normal disclosures that could affect the decision to purchase. So yes, if someone was murdered in the home or there’s a buried oil tank in the yard, you’ll probably still need to disclose that (check with your agent and real estate lawyer if you aren’t sure what to disclose).
Buying or selling the “as is” home certainly comes with challenges, so make sure that the agent you choose to represent you is fully versed in what it means.