I have been asked by Buyers what it means when they read in listings that properties are being sold “As Is” or “As Is with the Right to Inspect”. With the prevalence of Foreclosure and Short listings (which are sold “As Is” and which are ~1/3 of our local property listings), it’s quite common to see those terms in the description area of Listings and some non-Foreclosure listings are also sold “As Is.” What it means is:
- The Property Owner is selling the property in its’ current condition and will not make any Repairs for the new Buyer
- The Property Owner is not guaranteeing the condition of the Home
- The Property Owner will not negotiate price reductions based on Repairs that are found to be needed after Inspections are completed and after they have already agreed to a specific purchase price
As a Buyer, you’re responsible for completing Inspection of a Property, as usual, before purchasing the Property AND your Contract should always include terms specifying that you have the right to cancel the Contract and receive a full refund of your Deposit if you are not satisfied with the results of the Inspection, so purchasing property “As Is” isn’t a situation where you’re trapped into buying it if something is found to be wrong with it (the exception to this is Properties purchased “on the Courthouse Steps that are often purchased before viewing the interior”).
Many Properties ARE NOT sold “As Is” and, in those Transactions, it’s typical for your Purchase Contract to contain a Clause that specifies a certain percentage or dollar amount that the Property Owner is willing to pay for Repairs in the event that necessary Repairs are discovered. In most of these Transactions, it’s also typical that your agreement to purchase the Home is subject to your review of the Owner’s Property Disclosure Statement. The Property Disclosure Statement is a document where the Owner provides information to you regarding their knowledge of the current condition of the Home and any Repairs that have been completed in the past. If there’s information contained in the Property Disclosure Statement that’s not satisfactory to you, you can cancel the Contract within a specified timeframe without any penalty (“without any penalty” meaning without losing the Deposit that you made at the time of placing an Offer for the purchase of the Property).