If you’re working with a real estate agent or simply perusing online listings, you may come across the term “as is.” In real estate, “as is” means a property will be sold in its current condition (regardless of what the condition may be), and the seller won’t be making any repairs or updates before closing.
“As is” homes are typically listed by sellers looking for a quick, no-fuss sale — possibly due to a foreclosure, short sale, death or even just wanting to sell and move quickly. Let’s discuss what buying a house “as is” means and whether it’s right for you.
What does “as is” mean in real estate?
An “as is home” means the seller won’t be making repairs before closing. Unlike traditional transactions where the buyer can request repairs, what you see is what you get. However, the buyer can still submit a lower bid and negotiate the price.
If you’re buying a home “as is,” you may come across the following issues:
- Faulty roof
- Structural issues or mold and mildew issues
- Pest or rodent infestations
- Plumbing issues
- Faulty HVAC system
Despite the nature of the sale, it’s still recommended to get a home inspection so you can understand what issues you might be dealing with before closing.
While it may seem like “as is” homes are always in poor condition, this is not always the case. An “as is” clause is simply meant to help communicate that the seller won’t be making or financing repairs and remind the buyer that they are making this purchase based on their own judgment, as opposed to the statement of the seller.
Do note that the “as is” clause doesn’t absolve the seller from providing a comprehensive seller’s disclosure. They’re still typically obligated to disclose any known problems that might affect the home’s value and a buyer’s safety. However, the regulations surrounding an “as is” seller’s disclosure may vary depending on where you purchase.
If you buy an “as is” home and come across issues that weren’t disclosed, you may forfeit the right to request repairs or credits from the seller. If obtaining financing from a lender, the lender may still request you make repairs if any issues come up on the appraisal report.
Should I buy a house “as is”?
Buying a home “as is” isn’t always for everyone. Just like any major purchase, there are advantages and disadvantages worth exploring:
Pros of buying a home “as is”
- Exciting design opportunities: While not all “as is” homes need a complete makeover, they may be the perfect base for exciting renovations.
- Negotiation power: Hoping to buy in a neighborhood that may be out of your price range? “As is” homes are typically priced lower than comparable homes in the area, so you might find your dream neighborhood suddenly come into reach.
- Opportunity to invest: Real estate investors looking for fixer-uppers buy homes to renovate and flip for profit. Whether you’re looking to do this as a business venture or have always wanted to buy a fixer-upper, an “as is” home may be the right venture for you.
Cons of buying a home “as is”
- Potentially expensive repairs: If renovating doesn’t excite you, then buying a home “as is” may not be your best bet. Depending on the home’s condition, it’s possible there could be expensive repairs that are hard to avoid.
- Long renovation projects: Major renovations can take time. This might mean your home is out of commission for some time before you’re able to move in, or at the very least, you’ll be dealing with a noisy environment until the projects are finished.
- Possible safety hazards: An “as is” home may have hidden problems you’re not aware of that pose safety issues, especially since the seller may not be required to disclose every issue with the property. A home inspection may help uncover some issues in advance in the hopes you’ll have the time and resources to remedy the situation.
How to buy a home “as is”
If you’re interested in buying a home “as is” and are curious about how to move forward, here are a few steps you may consider taking on your journey:
- Find an “as is” home that suits your needs.
- Shop around for a mortgage and prequalify for your loan.
- Make an offer.
- Negotiate with the seller.
- Apply for your loan.
- Determine whether the home meets minimum property requirements required by your lender, typically through a home appraisal.
- Get the property inspected.
- Project potential renovation costs.
- Finalize offer.
- Close on your home.
Buying a home “as is” means buying a home in its current state. Essentially, it’s a “take it or leave it” scenario. If you’re excited about bargaining for a lower price and potentially renovating a home, then buying a house “as is” may be something to consider. On the other hand, if you’re concerned about potentially expensive repairs and long renovation projects, then it may be best to find another option that better suits your homebuying needs.