What does “as-is” mean in real estate and should you be concerned as a buyer? I cannot think of very few other terms in real estate that create as much confusion and anxiety with home buyers. Just to be clear, we are not talking “may the buyer beware” or “don’t buy a lemon”. Save that for the used car lot. When a San Diego property is being marketed for sale with an “as-is” provision, the only thing this means is the seller is literally selling the property as-is. The seller must still disclose as material facts and defects that are known. As-is does not give a home seller a “free pass”. As a home buyer, you still conduct your due diligence including a physical inspection of the property during the escrow period. In the event any issues arise, big or small, the seller will not pay to repair any short comings the property may contain.
For example: You make an offer to purchase a home in La Jolla. The seller accepts your offer but clearly discloses to you that they are selling the property “as-is” and will not be making any repairs based on any inspection reports. You proceed into escrow and conduct a physical inspection. Among simple cosmetic items, your home inspector determines the roof is worn and needs major repairs or complete replacement. In a normal transaction, you request the seller makes all repairs or concedes a credit to you at close of escrow. In an “as-is” transaction, your option as a buyer is to either accept the repair work and pay for all said work or to simply walk away from the purchase. The option to walk away is covered under normal conditions by your contingencies during your escrow period.
Search MLS for San Diego Real Estate for Sale
Where do we see “as-is” sales? Most bank owned sales and foreclosures are sold as-is. In addition, many short sales are sold as-is. Some trust and estate sales may be sold “as-is”. Finally, some private sales may be as-is. As-is sales can restrict your buyer pool as a seller so in most cases, I do not recommend any sellers sell as-is.
As-is sales are nothing to be afraid of but be prepared to take on at least some cosmetic items. Every house will have some issues. In the event your home inspector finds no issues, find a new inspector! Be prepared though. If the inspection reveals a major item, you must decide how badly you want the property, your purchase price relative to repair cost, and the total cost of repairs required.
Questions? Comments? Please send them my way anytime!
Here is what good old wikipedia says about as-is!
