Home Buying in Cambrian>Question Details

Trulia San J…, Home Buyer in San Jose, CA

What are the risks of buying a home "as is"?

Asked by Trulia San Jose, San Jose, CA Tue Feb 5, 2013

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Terri Vellios’ answer
I'll explain as-is in simple terms.

As-is mean that the seller is not contractually bound to make any repairs or give any credit. And that you as the Buyer understand that.

It however does not mean that the seller can withhold known conditions. If you discover additional information about the house during your inspections or investigations, then you have the right to not go forward with the purchase.

Understand if the seller has provided inspections and reports and those reports state there is $5,000 worth of work, and you get your own inspections and your inspector states there is $5,000 worth of the same work, that has been disclosed and to renegotiate on those same items would be in bad faith. However. Let's say the the seller didn't provide a chimney inspection and your inspector states there is $2,500 worth of work, then you can ask the seller to repair or credit. And the seller, per contract is not obligated to meet your demand.

Simply put, the seller needs to disclose, you need to inspect.
Web Reference: http://www.terrivellios.com
5 votes Thank Flag Link Tue Feb 5, 2013
The perceived risk of buying a home “as is” is poorly understood. The buyer has a responsibility of doing their own due diligence in any purchase. As long as a buyer receives seller’s disclosures and does appropriate inspections the buyer should have a good handle on the condition of the property. “As is” does not mean “buyer beware”. It means that the seller is unwilling or unable to do make any changes in the condition of the property. The buyer will be buying the property in its present condition – no changes, no upgrades, no repairs and no credits for any shortcomings that the property may have.
2 votes Thank Flag Link Tue Feb 5, 2013
The term "As Is" can be considered to be "As Described". Sellers are still obligated to disclose facts affecting the value of the property that they know or should know. "As is" means that you have inspected the property and are buying the property in its present condition.

Whether you buy a property with or without an "As Is" condition the seller is not providing a warranty that there is nothing wrong with the property.

"As Is" can affect your ability to get a loan to purchase the property. Lenders generally require that the property can be lived in without making repairs.

If you work with experienced real estate and loan agents you will receive advice about the risks regarding each property you consider. Be sure to ask so that any of your concerns will be looked at.

Juliana Lee
Cell: 650-857-1000
Top 3 agent nationwide at Keller Williams Realty

Over 20 years experience
Over 1,000 home sales in Santa Clara and San Mateo Counties
Web Reference: http://julianalee.com
2 votes Thank Flag Link Tue Feb 5, 2013
Texas investor sent me 'Purchase & Sale Contract' to buy one of my rent home 'as is'. Am I required to fill out 'Seller Disclosure of Property Condition' ? Is the meaning 'as is', no repairs, no changes, no updates, etc.
Flag Sat Aug 6, 2016
Have Texas investor with offer to purchase my rent home 'as is' . Am I required to provide 'Seller Disclosure of Property Condition ?
Flag Sat Aug 6, 2016
Buying a home "as is" without inspections is a very high risk, especially if there are unanticipated and expensive problems that must be fixed like a bad foundation. That is why we always recommend inspections by well qualified inspectors.

However as long as you have good inspections those inspections do tell you what problems need to be repaired and it is possible to get estimates from Licensed Contractors with respect to the cost of repairs. It is then possible to make a knowledgable offer.

As a practical matter a knowledgable listing agent will not let the homeowner accept an offer that requires the seller to make repairs or will limit the seller's liability for repairs to a maximum amount of money, often no more than $2,000 to $5,000. A knowledgable listing agent will not leave the seller liable for an open ended cost of repairs.

That is also why I recommend that the sellers do their own inspections before placing the house on the market, so that the seller knows what cost of repairs is reasonable to anticipate and adjust the list price accordingly.

The seller also has the opportunity to make the repairs before the house goes on the market. The advantage to the seller is that the seller will often get more money for the house if the repairs are made before the house goes on the market. In many cases the additional amount of money that the house will sell for is more than the cost of the repairs. The alternative is for the seller to sell "as is" with the anticipated repairs needed fully disclosed to all potential buyers, and the seller will sell the house for less money than if the house were in perfect condition.

Essentially as long as the buyer has the opportunity to have inspections performed by competent inspectors that reduces the risk to the buyer to a very low level.

In the current runaway seller's market here in the silicon valley it is common for buyers to try to make their offers more attractive to sellers by making the offer "as is" with no contingencies for inspections or financing. I do not recommend that.

At the very least I recommend that the buyer have a property inspection, pest control inspection and roof inspection. That way the buyer has a reasonable idea of the amount of money to anticipate for the cost of repairs. If the cost will be too high, the buyer has the opportunity to cancel the offer and have the buyer's deposit returned.

Thank you,
Charles Butterfield MBA
Real Estate Broker/REALTOR
American Realty
Cell Phone: (408)509-6218
Fax: (408)269-3597
Email Address: charlesbutterfieldbkr@yahoo.com
2 votes Thank Flag Link Tue Feb 5, 2013
Detail explanation and best answer thank you.
Flag Mon Oct 10, 2016
Best answer here, thank you!
Flag Fri Aug 19, 2016
Many people, especially agents, misuse and don't understand the meaning of "as is." Most real estate transactions here in California are "as is" sales. The meaning of the term in reality means that once the deal closes, the seller doesn't warranty anything about the property. However, the seller must still disclose all facts that are "known or should be known." They may also still be liable for anything that was left out of the disclosures.

Another important thing to know is that, based on the most commonly used contracts, you will always have the right to order any and all inspections and the seller must make the property available, and leave any and all utilities on so that the inspections can be completed to the buyer's satisfaction. As long of there is a property contingency in place, the buyer still has the ability to walk away and /or negotiate.

Also, in an "as is" sale, the buyer can still make a request for repairs, though this is most commonly answered with some sort of compromise on price and or a credit given for the repairs if the request is truly warranted.

Another interesting trend I have noticed is that sellers (most likely under the advice of inexperienced listing agents) are refusing to pay for home warranties. For typically less than $500, even for a big house, the seller gets to walk away knowing that if something goes wrong within a year, the buyer will be calling the home warranty company instead of coming back after the seller. "As is" does not mean free and clear. With a median price in the Silicon Valley of around $800k, I think a few hundred dollars for some piece of mind is money well spent.
1 vote Thank Flag Link Mon Aug 12, 2013
Hi Trulia San Jose,

The term "AS-IS" is found in most Real Estate Contracts and indicates that the Seller is not planning to invest any more money into the property. However, upon reviewing the Seller's Property Disclosure or during the "ALL-IMPORTANT" Home Inspection something is revealed that has been pointed out to you as unsafe or has not met legal code then you have every right to request that the Seller rectify those issue.

With all that said, although the Seller does not have to do ANYTHING to rectify this you ALSO do not have to buy the property. Therefore, make sure that you review all disclosures and have a Home Inspection so that you fully understand the condition of the property that you are purchasing.

Good Luck and have a GREAT day!

Best regards,

Emil Veltre, RPh, MS, CDPE
Realtor Associate
Liberty Realty
Mobile: 973.868.4034
Email: EmilVeltre@aol.com
Website: http://www.EmilVeltre.com
1 vote Thank Flag Link Sun Aug 11, 2013
the issue of "AS IS" is really misunderstood by most buyer and unfortunately, too many agents. It has little to do with condition but rather that you are agreeing the the seller is not going to make any repairs. There is a duty on part of seller to make full disclosure and you are saying i will buy based on the condition of the property as i understand it.

The secret to an AS IS sale is more due diligence. Best to make more inspections, rather than relying exclusively on a home inspector. Also good idea to walk the neighborhood, and maybe even knock on a few doors around the property.
1 vote Thank Flag Link Fri May 17, 2013
With the repairs and hidden things "as is" in the home. It might cost you a lot more money than you thought it might at the start. Get a home inspection.
Web Reference: http://www.StanTobiason.com
0 votes Thank Flag Link Mon Jan 20, 2014
Same as buying a car out of the parking lot and wonder when it will break down.

For agents we ask them to investigate and explain the exposure. Since I am there asking every step of the inspection and crawl into attic and go under the home with a bunny suit, I come back with additional information. I provide a home warranty to those so they have a place to get help. I also point out deferred maintenance. "Your roof got a few years left", "water heaters are not meant to last long etc". "Your attic got evidence of raccoon presence etc". Is it recent? When the home owners know there is a source for someone trust worthy they feel more comfortable. Most of the repair quotes are inflated and there are cheaper and easier fixes.
0 votes Thank Flag Link Fri Feb 8, 2013
Hi Trulia San Jose

As Is, means As Disclosed as per reports, and the seller wants to sell the house without doing any work.

A seller, may sell, As Is without , Any Reports, but this does not mean should the buyer do
inspections, and find $25K in Termite damage , that the Buyer has to accept the property and Not Negotiate the price down. S/he can or walk away.

A Seller may be an Investor and have no clue as to what the HOA Requirements or
Financial situation is, if a seller was not to get the HOA Docs., and ask As-Is on MLS,
does not mean a Buyer on review and receipt of HOA documents cannot back out
or ask for an Appropriate Negotiation.

It all comes down to the skill set of the Buyer's agent on negotiating the best deal.

Best regards
Web Reference: http://www.ruthandperry.com
0 votes Thank Flag Link Thu Feb 7, 2013
There are some great answers already posted below. I did want to add one thing as this does come up from time to time.

Let us say that the sellers had pre-sale inspections done and then the buyer also had inspections done on the home. Everyone went in to this with their eyes wide open.

Now, 6 months down the road, there is a problem with the sewer. It is going to cost the buyer $6000 to get this problem repaired. Who is responsible? Basically, that word, 'responsible' is the tricky thing. Whenever someone purchases a home, they need to realize that there is no way to inspect every aspect of the home. The pipes are not going to be dug up, the walls are not going to be opened so that an inspector can see the actual beams or floor boards, or wiring or pipes. There is always a chance that something will be missed, hence, all the language in the inspection reports that hold the inspector harmless in the future if problems do arise.

It's all about education. When one is working with a buyer, we, as agents, need to explain this, as we review disclosures and reports with our clients. Buyers, you need to pay attention. Hopefully, this will avoid costly problems in the future.

Seller's, disclose, disclose, disclose, anything that you might think the buyer should know. It's much better for your peace of mind!

Good luck!
0 votes Thank Flag Link Wed Feb 6, 2013
What are the chances that an actual buyer will ask questions instead of trulia?
0 votes Thank Flag Link Tue Feb 5, 2013
All the same, ACTUAL buyers (me) are searching for answers. The point is for Trulia to help buyers and drive their traffic. This also gives agents an opportunity to provide constructive advice and drive THEIR traffic and business. Thanks, Trulia, for asking the question and garnering, on the most part, helpful responses.
Flag Fri Aug 19, 2016
The same risk of buying any home.
It's up to you and your agent to do your homework and find out what's going on with the home.
The seller should disclose everything they know. But you need to make sure you have answers to everything that's important to you.

Just because It's "As Is" doesn't mean you can't ask if something is important. In a seller's market you have less chance of getting concessions, but it never hurts to ask.

Good Luck on your purchase.
If you're not working with an agent and have questions, I don't mind giving you an answer.

David Sciplin
Coldwell Banker Residential Brokerage
Dre# 01477066
Web Reference: http://www.davidsciplin.com
0 votes Thank Flag Link Tue Feb 5, 2013
there should be no risks because the seller has to disclose everything about the property so you would know what's wrong, the fact that its being sold on as is conditions doesn't mean they don't have to tell you what's wrong
0 votes Thank Flag Link Tue Feb 5, 2013
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