The “As is” Sale: What does it mean for a prospective buyer and seller?
In today’s competitive housing market, potential buyers are looking to provide their “best and final” offer in the hopes of it being accepted by the seller. On the other side of the spectrum, sellers are trying to do as little as possible to get their home ready to sell. Due to the limited inventory of listings, sellers have been able to market their homes in “as is” condition more frequently than ever before.
It is first important to define the term “as is”. An “as is” listing is simply a notice to the buyer and the rest of the market that the sellers have priced their property based on its current condition, both structurally and cosmetically. It is also supposed to reflect the lifespan of “big ticket items” such as septic systems, wells, furnace and other heating and cooling equipment. In other words, when you see an “as is” listing, you can infer that the seller is not immediately willing – or willing at all- to make any repairs, replacements, or fixes to the property in order for it to be sold.
What does this mean for a prospective buyer? First, it is important to note, that all price terms are negotiable in a real estate contract if each side is willing to participate in such negotiations. So, once a buyer makes an offer on the “as is” listing, it is accepted by the seller, and the deposit is received, the next step for the buyer is to do a home inspection (working under the assumption that the home inspection was not waived by the buyer). Yes, even “as is” sales can have home inspection contingencies. This means, that although the buyer was originally willing to pay their accepted offer price for the home, the sale is contingent on the buyer’s home inspection results. With that said, both the buyer and seller are operating with the understanding that the inspection is really for the buyer’s “informational purposes only”. Meaning, the seller most likely isn’t willing to repair or replace anything the inspector may report in their results and buyer can then decide if they want to move forward.
The buyer has a pre-determined time period (usually between 7-14 days) to complete their home inspection and decide if they are moving forward with the transaction. This time period is important because the deposit the buyer provided when the offer was accepted is protected during these days. Once the inspection is complete, and the report is generated, the buyer may still make requests to the seller based on the results. The seller, depending on the request and how much it would cost them, has the right to refuse or can oblige with the request. Or a third option, the parties can re-negotiate the purchase price based on these results, all within the inspection contingency time period. But remember, the sellers are already stating their price reflects the CURRENT CONDITION of the property, it’s flaws and all. This is the time in the transaction that it is up to the buyer if they want to move forward based on (1) The results of the home inspection, and (2) The seller’s response to any requests following the inspection report. The buyer can either move forward with the deal, or terminate the contract, receive their deposit back and move on with their house hunt.
As you can see, an “as is” sale is not as black and white as people may think. This is why you need a strong real estate team behind you to explore all of your options in today’s market. BPS Lawyers would be happy to connect you with realtors, lenders, and of course would be delighted to assist you in the purchase or sale of your next home!