Tuesday, February 9, 2016

Buying a property listed in “As Is” condition?

We are often asked what buying a house listed as in “As Is” condition mean?

When a property is listed in “As Is” condition, it means that the property is being sold in its current condition and the seller will not be making any repairs to it. Maybe the seller was renovating and ran out of time and money? Maybe the seller needs to move quickly and has no time to execute the necessary repairs and doesn't want to be held responsible for any problems after the close?

The term “As Is” is often used with Estate Sales or Power of Attorney Sales. That is, when the original home owner is either incapacitated or deceased and the individual representing the home owner has no idea on the state of the property and cannot provide answers to the buyer’s questions and therefore doesn’t want to be held responsible for any issues with the property after the close.

Regardless of what the reason is, buying “As Is” isn’t for all buyers! If at all possible, a buyer would be wise to have a home inspection performed on the house before making an offer. This way the buyer knows what work may be needed short and long term and the buyer can make sure he/she has the necessary budget above and beyond the sale price.

Why would a buyer even look at an “As Is” property then? Because sometimes the price may be comparatively lower than other properties in the same area or on the same street. The buyer is effectively buying the property without any representation or warranty by the seller. So there’s no going back to the seller and complaining if the property needs extensive repair once the buyer moves in. 

PS: Properties may also be listed “As Is” if the house is in terrible condition and not worth much on its own and the lot is the valuable asset (either because of its size or location). In this case, it’s unlikely that the price will be more affordable. Instead builders and contractors will get into a bidding war in order to secure this prime lot. 

In summary, if a property is listed for sale "As Is", first look at the size of the lot and the location. If its a lot that is bigger and in a great location, you know its likely to be attractive to builders who will tear it down and so it's likely to sell over asking. If its a smaller lot and the house looks like it may be interesting but needs work, get a home inspection done before offering. 

And finally, in order to protect yourself in what may be the largest single purchase of your life, talk to an experienced Realtor who is familiar with the area and with the sale of these types of properties. Get professional advice from a full service Realtor in your me!

For information on buying or selling your property and the current real estate market, contact us by email or call  416-322-8000.