In today’s real estate market, many buyers are alarmed when they see the words “as is” in an MLS listing, or are asked to sign a corresponding addendum as part of the purchase agreement. In their minds, “as is” translates to a Pandora’s Box of problems and surprises that they have no right to know about until they own the property.
But they’re wrong.
Generally, buyers see this phrase in three situations. First, the property is bank owned. As the banks employees have never lived in the property, and in all likelihood have never even been in it, they have no knowledge of a history of water in the basement, leaking roofs or ice dams.
The second usually occurs when the property is an estate. In that case, the seller has passed away, and the property is being sold by his heirs. Now, the kids might remember dad saying something about a roof leak in the duplex a while back…but was it in 1998 or last year? In other words, they may be able to remember some things, but probably not to a legal certainty.
The final situation may occur when a seller simply doesn’t want to make repairs or vouch for the condition of the building.
If a buyer decides to purchase an “As Is” property, he still has the rights to review a Truth-In-Housing Report (if required by city) and to hire an inspector for a thorough going over. In the event something troubling is found, he may then either ask for it to be repaired or attempt to renegotiate the price.
It is important to remember when contemplating the purchase of an REO property that banks are in the money business, not the home repair business. Most of the time, they will opt for a price reduction.