What Does “As-Is” Mean When You’re Buying (or Selling) a House?
It’s a phrase we’ve seen creep into listing descriptions more and more frequently: the ominous “as-is.” But if you truly understand what it means for both buyers and sellers, it’s not quite as intimidating as you might think.
I reached out to Jonathan Sherman to find out more. Jonathan is an attorney who specializes in residential real estate transactions (among other things), and he’s a dad who lives in Madison and practices in Parsippany. Here’s what he had to say about working through a sale where the home (or something in it) is listed as conveying in “as-is” condition.
What does an as-is sale mean for buyers? When a Buyer makes an offer to purchase a property in “as-is” condition the Buyer is agreeing to accept the property exactly as it is in its current form. This means the Buyer takes the property with any and all defects that exist. In most cases, the Buyer will have the opportunity to inspect the property, but the inspection results will be for informational purposes only. However, in some instances, the Seller may agree to allow the Buyer to perform their inspections within a specific time frame and allow the Buyer to unilaterally terminate the contract if major structural, environmental, or safety defects exist with the understanding that the seller will not be making repairs or offering any credits.
What does an as-is sale mean for sellers? First, as a Seller, you want to make it very clear up front that the property is being sold in “as-is” condition. This will help in identifying the right Buyer and not wasting anyone’s time. As a Seller listing a property in “as-is” condition, you are letting Buyers know the property requires work and that you will not be making repairs or offering credits in lieu of repairs. Further, any known defects will need to be listed on a seller’s disclosure. When a Seller lists their property in “as-is” condition, it is usually because the homeowner does not have the funds required to make the repairs necessary to cure the existing defects and listing the property at a lower price to offset the repairs makes the most financial sense.
What things in a home do you typically see offered in as-is condition?
Here are a list of items commonly listed in “as-is” condition: Fireplaces, chimneys and flues, sheds, garages, washers, dryers, refrigerators, pools, and hot tubs.
Would you recommend anything as an alternative to as-is sales, either to buyers or sellers?
If I am representing a Seller and they are not getting serious offers on an “as-is” listing, then I ask them to consider making the repairs in order to increase the value and appeal of the property so long as they can afford to do so. When a Buyer sees a home listed in “as-is” condition, they already have a preconceived notion that they can try to low ball the seller because of the required repairs.
Do you have any final words of wisdom or guidance on this topic?
When it comes to “as-is” sales, Buyers should do their due diligence and make sure they have an experienced team behind them. Negotiating an inspection contingency into the deal is always beneficial and there are creative ways to get this done if you have the right people in your corner.
Have more questions about buying or selling a home in as-is condition, or about any part of the purchase or sale process? You can contact Jonathan Sherman at Fein, Such, Kahn & Shepard, P.C. at (973) 538–4700 Ext. 138 or jsherman@feinsuch.com, or Meghan Mullin at Coldwell Banker Madison at realtormegmullin@gmail.com or 973–845–8375.
Meg Mullin is a New Jersey-based mom, realtor and writer. Feel free to reach out to her for information about buying or selling — she has tons of experience helping clients with both.
