A home that is sold “as is” typically means that it’s offered in its current condition and the seller will not make any repairs or improvements or give any credits to the buyer. When you buy a home “as is,” you’re agreeing to buy it with all of its problems, known or unknown. However, you may still use a home inspection as a contingency to purchase.
Homes Marketed “As-Is”
Homes are usually only marketed to be sold “as is” when they are bank-owned, inherited property, or sold by someone who is in financial distress. When buyers see that a home is sold “as is,” they immediately see a flag that something is wrong with it. But for bargain hunters, an “as is” home might seem like a great deal. The degree of below-market condition can vary quite a bit. Keep in mind that homes marketed “sold as is” will usually already be priced lower than the market, but sometimes sellers will entertain even lower offers. You might be getting a great deal if you know how to do many of the repairs yourself or in a cost-efficient manner. But keep in mind that you may also be betting your life savings on a money pit. The opportunity to inspect the property is critical when buying a home in less-than-good condition so that you have a clear sense of the road ahead.
Sellers and Buyers Can Use the “As Is” Strategy in Negotiations
“As is” isn’t exclusive to homes in distress or disrepair. It’s also used in negotiations, usually in competitive markets. Buying “as is” can be presented when an offer is first submitted or during a counteroffer. In a seller’s market where many buyers are competing for the same house, some buyers will state in their contract that they’ll buy the home “as is.” This can make their offer more attractive than other offers because the seller is assured not to be asked for further concessions based on inspection issues. But make sure your contract maintains the right to inspect and the right to terminate during the inspection period. You can agree to forego asking for concessions, but you should maintain the right to terminate based on any poor inspection findings. Buying a home without any inspection is always ill-advised.
Also, a seller may counteroffer that the buyer will buy the home “as is” if the seller doesn’t want to spend more time and money on the home for whatever reason.
Defects Must Still Be Disclosed
When a home is sold “as is,” sellers still need to disclose any known defects to potential buyers. Even if the sellers have never lived in the property, they must reveal any latent defects that they’re aware of. Selling a home “as is” does not absolve anyone of the duty to disclose.