Jaime Osborn

Broker and

Licensed Loan Originator

901-490-3542

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 ofc (901) 202-2000 fax (901) 202-2006 

Weichert Realtors Benchmark

3263 Sarazens Cir.

Memphis, TN 38125

Each office Independently owned and operated

 

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When searching for a home to buy, you may find the term "as-is" in the description of a home. What does this term really mean? Homebuyer's will find that this can be their worst enemy, especially if they are trying to purchase their home with an FHA or a VA mortgage. If you as a home buyer, find a house being sold as-is remember what I have told you about the <a href="http://blogforbuyers.com/fha-appraisals-vs-conventional-appraisals-and-what-it-means-to-you/" target="_blank">appraisals that go along with an FHA or VA mortgage.</a> They have stricter requirements that may put you the buyer at a disadvantage. If you decide that the house that you want to make an offer on is being sold "as-is", make sure that it will be able to pass the appraisal before you start negotiating your contract. If you or your Realtor don't think that the house will pass than you need to understand that you may be forced to pay the costs of any repairs that the appraiser says are needed. Sometimes those repairs may be minor, and sometimes not, but by the time you get this far into the contract, you will have paid for the cost of a home inspection and the cost of an appraisal. These costs will not be something you will be able to get back. So be prepared to lose them. Sometimes when a house is being sold "as-is" there actually may still be some wiggle room. When preparing an offer you may be able to negotiate some repairs up front even though the house is being sold as-is. Now in most cases this will not fly with the seller. But a full price offer with a few minor repairs noted in the contract may still work. Remember that the farther away from full price offer you get the less likely the seller will do any repairs. This includes seller paid closing costs, and any other items you may be asking the seller to pay for you as well. Some normal items that you the home buyer, especially the first time home buyer, may ask for are home warranty or a termite inspection. Be aware that this will probably not work if you are asking for major repairs. I don't suggest writing an offer for an as-is house where you are asking for a new roof, or any other big ticket item like that. There are some different items that are worth noting here as well. Often times foreclosed homes or homes that are being sold through a short sale, will not include the words "as-is" in any advertising that may be out there, or even in the description of the home, but they may be in the addendum that will come from the bank AFTER you have negotiated a contract with them. This can really be a problem if you and your agent are not prepared for this. I have had situations occur where minor repairs are needed per the appraiser’s report (that we didn’t even notice) and the bank was unwilling to do them, but here is the catch though, they won't give you, the home buyer, the ability to do them either. The home buyer will not have the required permission to physically send someone to the property to get the repairs completed (there will usually be some type of clause explicitly disallowing this in the addendums). I have personally had contracts fall apart due to some very minor repairs that a bank wasn't willing to do, and the buyer wasn't allowed to do. This situation is usually avoidable for a buyer, by just making sure that, before preparing an offer to buy a home, the home is inspected by a trained eye who is looking for just the type repairs that will be needed. Any experienced Realtor should be able to navigate this for a first time home buyer. Just make sure that the realtor you are using knows what to look for.

November 8, 2013

 

 

What the term as-is really means.

 

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