As-is purchases are just what they sound like; the seller has no intention of making repairs or upgrades prior to the sale, and the buyer has little or no negotiating power. Oftentimes, that’s because the prospective buyer plans to completely overhaul the structure. There’s no sense in worrying about electrical system defects when the whole thing will be replaced.
As-is sales also happen when the owner just wants out, which can happen for myriad reasons.
Unless a property investor or any new owner plans to bulldoze the structure and take it down to the bare dirt, knowledge is never a bad thing. Defects affect the value of any property. Hidden ones can cause unexpected problems for the investor. The more a buyer knows, the more he or she can weigh the pros and cons of signing on the dotted line.
Buyers Should Ask for a Home Inspection Contingency
According to Inman, buyers should insist on a home inspection contingency in an as-is sale. If the home inspector finds defects with which the buyer cannot live, the buyer can walk away. Buyers might lose their earnest money, but that is better than buying a home valued so low that it can’t support the volume of repairs.
Inman says most locations offer buyers some protections in an as-is sale, even without a contingency. An as-is sale in some states really means “as-disclosed.” The owner is obliged to inform the buyer of all known defects. If the home inspection turns up a host of unexpected and costly or dangerous problems, the buyer can legally walk away with varying degrees of legal hoops through which to jump.
In some states, however, as-is means just what it says. The sellers have no disclosure responsibility, and the buyer knows he or she might be buying trouble. An inspection is even more important in such situations.
An inspection helps first-time home buyers invest with the confidence that they can handle repairs.
Defects Can Outweigh the Value of the Property
A money pit isn’t just a bad ’80s movie. The costs to repair a home might be more than the value of the dwelling and land combined. That happens more often than it should, but a home inspection can help buyers make informed choices.
Let’s say, for example, that the roof is worn and the attic leaks. The buyer probably expects to replace the shingles. What they might not expect, at least not without a home inspection, is that the decking has rotted and the roof trusses have rusted fasteners. The cost of a new roof could double.
If the home has hazards, such as friable asbestos from broken ceiling tiles, the new owner might need an abatement crew. Although professional abatement usually isn’t required when performed by the homeowner/resident, it might be required for an investment property that will become a rental.
Code violations are another serious and potentially expensive concern. Renovation magically activates the code upgrade requirement. Left as-is, code violations usually don’t apply. However, every part of the home that the new owner renovates must be brought up to code. It’s cheap and quick to rewire a bad or outdated outlet. Rewiring the whole room (or the whole house) to bring it up to code is neither cheap nor fast.
As-is property can be a great value. If the buyer is savvy, handy and knows how to maximize the renovation budget, he or she could turn a cheap deal with problems into a spiffy, shiny, and code-compliant home. But unless the buyer has experience with all of the systems that make up a house, the investment could turn sour fast.
Certified home inspectors help people help themselves. A great home inspection reporting app supports that good work. When you use an app that’s convenient, versatile and doesn’t have unnecessarily complicated bells and whistles, you can focus on what’s most important, namely, finding home defects and presenting them to your customer in a professional, easy-to-read report.
If you’re in the market for something better, Report Form Pro is the answer. Download the home inspection app for Android or get it for your iPhone in a simple download.