The potential to save a pile of cash and quickly purchase a home while the market is as red hot as it is now is driving more and more buyers to the “as-is” category of houses.
A house listed “as-is” is often a good choice for certain buyers.
Let’s look at what that listing means and how it could benefit you to buy a house as-is.
What does buying a house as-is mean?
Buying anything as-is is exactly what it sounds like.
The seller is telling potential buyers that they have an item they’d like to let go and they acknowledge there are some problems — they might be minor, they might be major — and here’s the asking price. You’re buying the house in the condition that it’s currently in.
While buying smaller items as-is, like a piece of furniture or a used gaming console, buying a house as-is is a risk many people simply aren’t willing to take.
When people make large purchases, they usually want to know they’re getting something that is as close to perfect as they can get. Buying a house as-is usually — but not always — means that the home will need some fixes before hitting perfection.
As-is also doesn’t always apply to the entire house.
Sellers can list certain things as-is, like a cracked garage floor or a rotting deck or leaky gutters, all the way down to appliances. A dryer in need of a new belt? That appliance is listed as-is. A downspout worked its way loose in a recent windstorm? If the seller doesn’t want to fix it, it must be listed as-is.
Of course, as-is could mean way beyond just minor repairs. Did a leaky roof pour water into the attic the entire Spring and fuel an outbreak of black mold? Are the basement walls crumbling? Is the shingle roof more than 40 years old? These are red flags to address before making an offer.
Basically, sellers are telling buyers that they either aren’t willing to do the repairs or simply can’t afford to make them. The seller then inherits these projects with the house if they choose to purchase.
The phrase “buyer beware” should immediately pop in mind when seeing as-is on any listing, but in general, it’s the buyer who usually has leverage in these situations.
Say the buyer doesn’t care if the pool out back has seen one too many cannonballs. They hate to swim and plan on filling it in and planting a garden there instead. Then the as-is condition isn’t a big deal to the buyer.
Also, most homes sold as-in are results of bank foreclosures, which is now a significant portion of the housing market. Buyers can find great deals within the foreclosure market, but most of these come as-is.
Things to consider before you buy a house as-is
Each home buyer has their wish lists that usually conflict with their budget.
Buying a house as-is can add a layer of stress for certain buyers. Some consumers simply do not want the hassle.
For those willing to look at as-is properties, consider the following:
- Budget — How much do you have in the bank for repairs?
- Knowledge — What needs fixing and how much is it going to cost?
- Timing — Do you have a place to stay while repairs are made?
- Return on Investment (ROI) — Is the hassle worth the return on the buyer’s investment?
These can be answered by hiring a qualified and trusted housing inspector. Since these homes are usually sold by banks, the buyer has to pay around $200-400 for an inspection. But for as-is buyers, inspections are required.
This report detailing every single thing that is wrong with the property is worth every penny to someone looking to save thousands on a new home.
Lenders also need to know this information to get the buyers the proper loans. Loan qualifications require minimum property standards, like a solid roof and a good heating system, but will overlook certain defects, like missing handrails or a busted-up sidewalk.
The benefits of “as is” house
The biggest reason to buy a house as-is is the potential to land a great deal. In a sellers’ market, any bit of an edge that goes to the buyers helps.
The label as-is definitely shortens the list of potential buyers.
That’s a benefit to those who have the resources and patience to make those repairs. For example, buyers often find homes listed as-in in areas they desire but wouldn’t be able to afford.
Listing house as-is does not mean the seller can legally hide the problems. Although it varies state to state, disclosure laws exist for things such as water, mold damage and termites. The seller must inform the buyer about any issues as soon as they discover them. If they don’t, they open themselves to lawsuits for repairs.
A good real-estate agent can also be a vital resource when buying any home, especially one listed as-is.
Buying a home as-is gives the buyer more leverage. A comprehensive home inspection report is vital to negotiate the price on a home listed as-is or otherwise. Negotiating on the buyer’s behalf is just one of the reasons that a real estate agent is so beneficial.
Should you buy a house as is?
Each buyer is different.
Some people simply cannot stand the thought of making a huge purchase — and outside a college education, a home is usually a person’s largest buy — without the guarantee that the home is move-in ready.
This opens the market slightly for buyers willing to get into a house that will need some fixes before occupation.
Many people will not even look at homes listed as foreclosures because of the as-is label, but expanding home searches to include as-is can be worth it for many buyers, despite the repairs that come with them.
Choosing the right home can be confusing, and Homefinity provides a checklist to help buyers understand exactly what they need and want.
With a good real estate agent, trusted home inspector, and an experienced loan specialist from Homefinity, the mystery of buying a home as-is disappears.Reach out to discuss pre-approval today!