Today, we see the words AS IS used quite a bit in advertising properties for sale. Foreclosures are listed in AS IS condition, as they are bank/lender owned. Often times these homes have deferred maintenance issues. Some have some high ticket repairs that need to be taken care of, but not all. Banks typically don't want to deal with the repair issues that come up. And, some are good, clean properties at bargain prices.
Typically, these properties have NO seller disclosures, a list of items of interest to a potential buyer. This checklist refers to the overall major operating systems of the house and how they function: appliances, A/C system, roof system, electrical system, plumbing or wells and septic systems, etc. It can also provide other pertinent information about the property, local community and assessments. Sellers are required to diclose items that they know are a problem with the property.
As these bank owned property don't have seller disclosures, buyers should be cautious to get a home inspection done by a certified inspector.
Today, we also typically see short sale properties being offered in AS IS condition. The sellers are still the owners of the property, but their lender makes the final determination as to whether they will accept any offer(s) presented on the property. When an offer is accepted and the short sale is approved, many times we see the lenders not agreeing to complete any necessary repairs that may turn up on a home inspection. So these are AS IS also. Occasionally, we see some that have agreed to make some repairs.
But, what about the 'normal' seller? What happens when he decides to offer his property in AS IS condition?
Is this a buyer turn off?
Do buyers automatically think that AS IS means that there are items of disrepair in the property?
Often times the question is, 'why is the home being offered in AS IS condition?' What's wrong with it?
Do buyers want to look at homes offered by sellers in AS IS condition?
Perhaps, if they are hoping to grab a good deal.
Is that the mentality? If it's AS IS then I want a deal.
What if there are no repairs needed on that property and it's priced very competively for the market?
Perhaps the seller is from out of state, and there are only minor repairs, but he doesn't want to be bothered with trying to coordinate them. Or the house is part of an estate sale? Many times these are AS IS just because none of the heirs have lived in the house.
Sometimes, for the 'normal' seller, there are good reasons to offer a property in "AS IS" condition.
But, does this help or hurt a seller in getting the house sold?
This article is authored by
Sandy Shores REALTOR®, Melbourne/Palm Bay FL Real Estate
Brevard County Real Estate & Investing
I also buy, sell, rent, own and manage Investment Property.
I agree with you Sandy, the connotation that an "AS-IS" label brings is that the problem is so big, that the seller does not want to deal with it. In my opinion the price suffers because of it. I would suggest that if you are going to sell a house on an as-is condition, that you get at least a home and a pest control inspection from a reputable company, and offer those reports to potential buyers so they know what the true condition of the house is. Leaving a copy at the house and making sure to have anyone interested in writing an offer that they must first read and understand and sign and date the reports. That way, it will help dispel any notions that the buyer will have to spend lots of monies fixing the property. Good post, thank you.
Antonio
Sandy - That's certainly food for thought! The "AS-IS" label, especially in an environment of no disclosures sends up all kinds of warnings about having all needed inspections performed. I also like Antonio's suggestion about having sellers leave available reports in a home for buyer viewing. It could make a substantial difference in how the property is viewed, and assist when writing an offer.
AS IS definitely puts a negative taint on the property. Even if nothing is wrong, the buyer is going to expect a reasonable discount simply because there could be some sort of surprise repair that they are unaware of. Bob Bruss the late real estate columnist wrote an article a few years back about how to sell for top dollar and one of his suggestions was to not advertise the house for sale AS IS because buyers will want a cheaper price in return.
Hi Sandy ~ I think "as-is" gives the impression - perhaps unfairly - that the house needs a lot of work. Or that the seller is hard to deal with. Even if either - or both - are true I think it's better to omit the phrase and deal with things as they come up - and perhaps put a bee in the buyer's agent's bonnet that the seller priced the house to reflect the condition - so don't expect a lot. And as we all know, once you get into the inspection process a seller who was bound and determined to stay firm sometimes softens in an effort to keep the deal together.
Liz
Sandy, Great point. When I see the words "as is" I think of the home needing major repairs or renovations. I think agents should describe in listing notes if it's major or minor work that needs to be done.
Hi Sandy, When I see "As Is" it does raise a red flag, as in: "What's wrong with it?" I think those words, even if true, put the seller at a disadvantage, because buyers do think they can get a great deal for next to nothing.
Sandy,
Either it is what is wrong with it or I am getting a deal.....
Sellers should be willing to make repairs or give compensation.
Ann
Sandy, as I see it every home is as is unless a repair is needed then it becomes a negotiation. Sell it or don't?? On the foreclosure properties, we just accept that the asset companies don't do repairs, but our REO companies are running into a problem with point of sale inspections on well and septic requirements. They cannot sell those if the well or septic doesn't pass!!
This post is good food for thought!!
Antonio & Alexia, I also believe that prices suffer in AS IS sales. Great point to get inspections done upfront and put them out for prospective buyers to view. Thanks for the input!
Myrl, So true, the inspections that Antonio mentioned could help a buyer make a more well educated decision when writing an offer.
Rob, We seem to get the same types of responses on AS IS properties, What's wrong with it? And sometimes it's just the seller's set of circumstances, where they feel that it may be inconvenient to do repairs.
Elizabeth, Another good point - I have seen where buyers felt a seller may be a bit challenging to deal with just because the property is being offered as is. And that's not always the case. And it's not always the case that there is anything wrong with an AS IS property.
Carole, Good idea in mentioning in agent remarks what is or is not wrong with the property. I usually make a notation that seller is not aware of any property defects (if that's the case).
Hey Miss Mary, The words AS IS do put a seller at a disadvantage - it really scares buyers, OR they smell blood and want to low ball an offer.
Ann, You're right, it's best when sellers have some flexibility and offer to make repairs or offer repair money.
Hi Caren, Interesting point of view...never considered it that way...it is AS IS until a repair is needed. We are seeing the same things, where banks are finding that they must do certain repairs so that the buyers are able to get their financing and close on the property.
Sandy, I really believe it does have Negative Connotationbecause I used it in a very stressful negotiation with a buyer. I represented the seller and the buyer was really low-balling on price. We accepted but said you can have the property at this price AS-IS and they backed out immediately. They said that are terms were heavy handed. This tells me that the buyer was going to be asking for a lot more after inspection...
Hi Paul, I think AS IS really scares many people. Many automatically assume that means there are many things wrong with the property. I agree, sounds like that buyer would be asking for alot more.
Sandy,
I think sellers should not use these words... Sounds like there is a problem and they know about it?
Ann
Hey Ann, I think that you're right - many buyers have a real problem with these words being used. It's a real turn off!
Sandy,
I wonder if sellers are thinking clearly on this...would they buy a home AS IS?
Ann