You might come across listings that advertise a property as-is if you are looking for a new house. It’s an option for sellers who want to sell quickly.
The homes are often less expensive than comparable properties for buyers.
There are many benefits to buying a home in its current condition, especially in this competitive housing market. However, it is important to fully understand the implications.
Sellers list their house as-is and will not make repairs or modifications before they close on the property. Sellers cannot guarantee that everything will be in good condition or working order. A Seller’s Disclosure is not required.
It’s your responsibility to repair any problems that you find after you purchase a property advertised as “as-is”.
A seller selling as-is must still meet minimum disclosure standards in each state and federal. These standards will inform you about lead paint conditions.
A home being listed as-is does not necessarily mean that it is inoperable. A home can still be listed as-is, even if it has minor or major problems.
This could happen when a seller is in financial distress or if they are in a hurry and don’t have time to wait for contractors to complete even minor cosmetic work.
It’s possible that the home is no longer livable in its current condition. Your lender might not be happy with you making the necessary repairs.
Certain livability requirements are required for many types of loans. These minimum property requirements are also known as MPRs. These MPRs will be assessed by appraisers.
Conventional loans are not guaranteed or insured by the federal government. Fannie Mae, Freddie Mac and many other conventional loans conform to these criteria. Fannie Mae or Freddie Mac homes can be bought if they have minor problems. The house must be safe and any structural problems should be normal wear and tear.
You might still be eligible for a conforming loan for as-is property if you have plumbing leaks, interior damage, or missing light fixtures.
The MPRs for government-backed loans like VA loans are more stringent than other types.
An inspection is required if you are interested in purchasing a home as it stands. An inspector will help you to understand the problems and let you know how much it might cost to fix them.
A inspection is not required for an appraisal.
A lender will usually require an appraisal to determine the property’s value. You might choose to have a home inspection.
Sellers can refuse to inspect a property as-is. This is a red flag.
A home being sold “as-is” does not necessarily mean that it is complete. A seller could list a property as is but refer to only certain parts. Broken pools and sheds are often partial features that can be added as-is.
Ask the seller what they mean by “as-is.”
You don’t have to waive your right for disclosures when buying an “as-is” home. You must be aware that the sellers are bound by federal and state regulations regarding disclosures about any issues in the house.
Each state has its own disclosure laws. Some states, for example, have water damage disclosure regulations.
You may be able sue a seller if they fail to inform you about a problem in your state.
Lead paint is the only federal disclosure requirement. The seller must disclose if the home was built prior to 1978.
If you are considering buying a home as is, a good agent can help. An agent who is knowledgeable about disclosure laws can help you understand what the implications are for buying as-is.
These can make you more confident about your purchase decision, or help you decide when it’s best to not buy.