They say that beauty is in the eye of the beholder. And when it comes to as-is contracts, the same adage holds true except that in this case, ‘beauty’ is more akin to ‘opportunity.’

With an as-is home, what you see is what you get so you have to ask yourself: What, exactly, do you see?

Homes are sold as-is for a reason – and that reason, more often than not, is the seller’s reluctance to make repairs which releases them from responsibility or liability for the home’s condition. In return, the buyer typically gets a better deal on the property – albeit with no guarantee that it’s free of minor – or major – problems.

Gamble Big, Win (And Lose) Big

The first rule of as-is contracts is understanding the distinction between the two types of as-is home sales. The first is real estate-owned, or REO, which is a house owned by a bank after a foreclosure. The second is a short sale, which is a house sold by an owner whose mortgage balance exceeds the property value.

Why do the distinctions matter?

Because an REO might allow for some room to negotiate repairs, especially if safety hazards or government mandates are involved, it never hurts to ask for repairs, regardless of a home’s as-is status. The worst they can say is no, right?

On the other hand, a short sale typically means no repairs. Still, never hurts to ask, right?

What You Need To Know Before Buying An ‘As-Is’ House

Here are some tips for buyers and sellers involved with as-is sales:

• Buyers should insist on a home inspection contingency in the contract unless you plan to tear down the home and build new construction.
• As-is can be costly so they’re not for buyers who don’t have the cash or skills to make major repairs.
• Always research into the actual repair costs, along with prioritizing repairs, to make sure you don’t walk too quickly – or too late. 
• Immediately upon ratification of a contract, buyers should call their insurance agent and ask that they review the Comprehensive Loss Underwriting Exchange (CLUE) report on the home to determine if any insurance claims have been made. 
• Remember that disclosures might be worthless as many states require most sellers to disclose what they know about a property’s condition and in the case of an REO, the information might not be useful since the bank never occupied the home.
• Buyers should use a licensed home inspector, and your real estate agent should attend the entire home inspection with you. 

While as-is homes are certainly a gamble, a little research, patience, and gumption will go a long way in turning an ugly-duckling house into a home. Good bones can go a long way if you’ve got the moxie. 

For all your real estate buying and selling needs, from straightforward to every which way but loose, count on the experienced professionals at DeLeon Sheffield Company to guide you, every step of the way.

Because at DeLeon Sheffield Company, ‘We’re More Than Realty; We’re Family.’