Repair Requests On Foreclosures and Short Sales
Deanne & Jim make some good points in their blog below. It is important to keep in mind some repairs MAY be requested on both short sale and REO's, and they MAY be made prior to closing. Not all distressed properties being sold As Is means inspection results may not be used to help the buyer get into the property.
Repair Requests on Foreclosures and Short Sales
Copyright (c) 2010, Deanna & Jim's GOLD Team, RE/MAX Olympic
Foreclosures (REOs, bank-owned sales), short sales (preforeclosures), auctions, and bankruptcy trustee sales are generally listed as AS IS. This means that the buyers should understand that the property is offered at the price listed in "AS IS/WHERE IS" condition, that is exactly as it stands when shown.
Buyer's agents showing AS IS property are obliged to explain that no repairs or changes may be requested. Buyers are sometimes considerably more reluctant to absorb this information than the price discount reflecting the non-negotiability of repairs.
SOmetimes buyers make offers on this property thinking they can have their way, anyway!
The buyer's agents may advise their buyers that it is still worth having a home inspection done because the home inspector may discover potentially deal-breaking conditions that make it better to leave the contract than go forward. The agents encourage these home inspections because (a) it is better for the buyers to know what they are getting in advance, and (b) the agents want to prevent any future claim that the buyer should have been informed of any condition that may exist which the agent has not discussed.
Home inspectors are paid to find problems (and to educate in case no problems are found!). Now that the inspection is done the buyer has a written report full of all the detailed descriptions of all the things wrong. The buyer asks the agent, "Can't you ask the Seller to fix this?"
The agent points out that the contract says, "AS IS." The buyer is not so happy at this point. They love the idea of getting the house for the discounted price, but getting all these problems is not what they expected!
AS IS means AS IS. Period. If you want to negotiate repairs you should not sign an AS IS contract.
(Of course if you have VA or FHA financing, and your lender's appraiser identifies repairs requiring completion for the appraisal then your agent may present these "lender-required" repairs to the listing agent for the Seller's review. It is a violation of law for you, your agent, or your loan officer to attempt to contact, speak to, write, or influence the appraiser in producing their initial or revised reports. This is not a place to try to get crafty.)
There is property which is not listed AS IS. It is usually resale (normal sale, straight sale) property. With this property you can negotiate to your heart's content over repairs. It is not discounted the same way AS IS property is. The flexibility of being able to negotiate repair requests has a value!
(Deanna and Jim's GOLD Team has handled over 500 Northern Virginia residential real estate sales in the last 10 years, including over 140 bank-owned, AS IS sales and many short sales AS IS. We have MBA, MSE, CDPE and Associate Broker credentials. We love to "Knock Your Socks Off" with responsive personal service.)
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