In a nutshell: when a home is being sold “as is”, it means that 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 might be mountains or 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.
Buying the “as is” home:
- Go in with your eyes wide open. The Seller isn’t guaranteeing anything, so be prepared for anything.
- Get a home inspection by a qualified inspector.
- Have lots of money on-hand. 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:
- Understand that the pool of the 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.
- 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 disclosure that.
Buying or selling the “as is” home certainly comes with challenges, so make sure that you are fully versed in what it means.