As you are perusing listings online, you may come across stipulations on certain houses that are considered “As-Is” property. For some, this is a big enough red flag to make them run away from the home listing as fast as possible. Others would see it as a necessary point in the real estate world.
The truth is that neither is 100% accurate, hence it is very important to understand what the term “as-is” means before you decide whether it’s worth considering buying the house or not. Read on to find out more!
What does the term “as-is” mean in real estate?
In real estate, the term “as-is” means that the property is being sold in its existing condition, with no responsibility whatsoever on the seller to repair the property beforehand. It is a “what you see is what you get” property sale.
Normally, if the buyer notices something wrong with the property, they can request the seller to pay for the repairs before closing the deal. The buyer’s purchase of the property is contingent on the repairs being made in advance. In this case, however, sellers don’t entertain such requests. You purchase the house in its current state.
“As-Is” clauses and seller disclosures in the purchase
Even if you agree to purchase the property subject to “as-is” clause, if you buy the property, but the seller did not disclose any major problems within, you could have a case against the seller even with the “as-is” clause. It is best to speak to your realtor or attorney for clarification and advice in such a situation.
What a buyer should look out for when entering into an “as-is” purchase
There are several things a buyer, can do to protect themselves from a bad deal if they are interested in buying an “as-is” property.
- The buyer should begin by becoming acquainted with the common issues that must be disclosed about the property. In Illinois, for example, it is legally required that the real estate agent and the seller mention specific problems before closing the deal. These include, but not limited to, leaking roofs, asbestos, termite damage, and major plumbing issues. If a seller doesn’t disclose a problem that’s within the state’s list of required disclosures, you have the right to sue for repair or damage costs.
- Secondly, even with “as-is” deals, a buyer should perform a thorough house inspection to protect themselves from unwanted surprises. A home inspection will confirm any existing damage and reveal anything the agent and seller were not aware of. An inspection will also give you a good idea of what you will need to repair and how much it will cost you if you decide to purchase the property.
- Finally, before you settle on buying the house, weigh carefully the potential costs of upgrades and renovations. Check how much these costs will impact your finances and how far your lender might be willing to help out. Most lenders require that the property meet various livability standards, also known as minimum property requirements, or MPRs. Ensure your property meets the standards for loan qualification.
- The truth about any piece of real estate or owning a property is that you will not know if you are making a reasonable decision until you have all the details. With an “as-is” property, the best thing to do is to first approach the situation with caution. Schedule an inspection, estimate the repair costs, and then proceed from there.
- Perform some due diligence before entering into the contract, like consulting with a qualified attorney, examining the deed records for any red flags, and perhaps having a title search performed. While you may end up paying for all these protocols, it can save you from falling into a harmful deal in the future.
- It would also be a good idea to weigh the pros and cons of an “as-is” property. In some cases, a buyer can secure a great deal on a property that they would never have afforded. These homes go for a much lower price than new ones.
Are you thinking of buying an “as-is” house in Illinois, but don’t know where to start? At Johnston Tomei Lenczycki & Godberg LLC, we have extensive experience dealing with matters regarding real estate purchases. Contact us today to schedule a free consultation and advice regarding your matter.
The post “As-Is” In Real Estate Transactions appeared first on Johnston Tomei Lenczycki & Goldberg LLC.