Are you currently on the hunt for a new house? On your search, you may run across homes listed “as-is.” These properties can be attractive because they’re usually (though not always) paired with a lower listing price. But before you think about buying an “as-is” home, be sure you fully understand the pros and cons.
What you see is what you get
The term “as-is” means the homeowner is selling the property in its current condition, and will not make any repairs or improvements, or provide any buyer credits to cover these expenses.
“Stating that the sale is ‘as-is’ communicates to the buyer that they should rely on their own investigation to determine the condition of the home and that the seller is making no guarantees that things are in working order,” said REALTOR® Jessica Hillyer, associate broker with Coldwell Banker Hubbell BriarWood.
This type of sale is often associated with bank owned properties and estate sales where the seller has never lived in the home and has little or no knowledge its condition. But the “as-is” label can also be used by someone that doesn’t have the time or money to make repairs to the home before selling.
However, the seller must disclose any known problems, and the buyer can still negotiate contingent upon a real estate inspection.”
The pros and cons
The biggest benefit of an “as-is” listing is the potential for a bargain, and while it is entirely possible to get one of these properties at a lower price, keep in mind that many are already priced to reflect the current condition. While there is the potential for negotiations, buyers shouldn’t automatically assume an “as-is” status means the seller is willing to deal.
Even if you’re able to get a lower price, buying a property “as-is” can add a layer of stress for certain buyers, especially if the home needs a lot of work. Before you take on an “as-is” property, it’s important to determine your budget, find out what needs to be fixed and how much it will cost, consider whether you have the time to dedicate to repairs, and crunch the numbers to see if the hassle is worth the potential return on investment.
However, Hillyer says buyers should not assume that all “as-is” properties are total fixer-uppers.
“Sometimes a property is sold ‘as-is’ but only needs minor repairs or some routine maintenance,” she said. “In the case of a bank owned property or an estate, the seller may sell the home ‘as-is’ not due to its condition, but due to the fact that they have never lived in the home, are unaware of the condition, and are not willing to make repairs if issues are discovered during home inspections or appraisal.”
Due diligence is key
Having a professional inspection before the purchase of any home is important, but it is critical in the case of “as-is” properties. While this label makes it clear that the sellers aren’t willing to pay for repairs, the inspection is still an important step that helps buyers learn all they can about the home they’re buying.
Other due diligence steps include having a pest inspection, checking with the municipality to ensure there are no assessments or liens on the property, and possibly having a licensed contractor examine the home’s major structural components.
Partner with the experts
Should you decide to pursue an “as-is” property, it’s best to seek professional guidance. Not only should you enlist the help of an experienced REALTOR® — someone who can help you navigate all the nuances of this type of sale — but you should also consult a local lender. Some properties, specifically those with major structural or safety concerns, may not qualify for certain financing programs, so it’s best to have a mortgage expert on your team.
“An ‘as-is’ sale can be a great opportunity for buyers to get a home at less than market value,” said Hillyer. “Whether or not it’s worth pursuing one of these properties depends on several factors, so be sure you’re working with a trusted agent who is guiding you and looking out for your best interests.”
If you’re interested in checking out available “as-is” properties, visit the Greater Lansing Association of REALTORS® website at www.lansing-realestate.com to find a listing of area experts.
This article originally appeared on Lansing State Journal: What Does it Mean to Buy a Home “As-Is?”