Managing Real Estate Broker with Howard Hanna Rand Realty License # 49FA1074963
With apologies to Bill Clinton.
My firm sells a wide range of properties: upscale 7 figure estates right over to a $7500 trailer. Among our niches is the area broadly described as the distressed property market. This could vary from short sales to bank owned foreclosures to property that is owned free and clear but in poor shape. The latter category could be an estate home or a house that sustained fire damage. Westchester has tons of pre-war builds, and we never seem to run out of this inventory. It is often a very good opportunity.
Virtually all distressed property, especially bank owned and short sales, is sold "as is." Even a neophyte buyer seeking something they can fix up can deduce that if they want the fixing done before they buy that it really isn't a fixer upper anymore.
With the new year and new freshman class of buyers entering the market, the definition of "as is" appears to be subject to a nuanced interpretation that challenges the meaning of the word "is." A contributing factor to this trend is a pool of licensees who say they are buyer agents but seldom do more than unlock doors and act as carrier pigeons for uneducated buyer clients they do not have the intestinal fortitude to advise.
If you seek to buy a distressed home sold "as is" that means that you are buying it subject to much of the following:
Code violations
Old open permits
Non conforming work, such as illegal baths, decks, or additions
Environmental issues like mold, radon, and submerged oil tanks
Shag carpeting
What you see is what you get. So look carefully.
Another inclusion of "as is" is the precept that the buyer's questions on possible changes to the property, such as additions, demolition and rebuilding, and other types of restoration, are their responsibility. The "buyer agent" should accompany their buyer to the building department and get answers. Asking the listing agent is not due diligence, and can land you in hot water if you skip doing your homework on behalf of the client. Get down to White Plains, Yonkers or Chappaqua and pull that property file at the building department. It is your job.
The ironic side of this particular issue is that many offers are accompanied with reassurances and oaths from the agent that their buyer is experienced, savvy and been around a while. Oftentimes, it is quite the opposite- the buyer is buying their first inventment, possibly getting money from family members, all of whom offer well meaning but misinformed advice, filling the vacuum of their agent's input.
I should conclude by saying that this is not a rant; I am the listing agent and get the sale no matter who buys. However, from where I sit, I see people lose deals left and right because they don't know the rules of engagement. It is ironic, that the agent often doesn't want to rock the boat by saying inconvenient truths, but that agent can eventually lose the client after months of running around when the buyer gets frustrated that they are not getting their intended result.
The takeaway for agents is that you need to do your due diligence and not rely on the listing agent. You also need to advise your client on everything, even the uncomfortable things.
For consumers, "as is" means just what it says, what you see is what you get, and asking for more can leave you out in the cold.
David- Certainly. I have one listing that was built in 1750 - 1750!!! It is not historical and is, frankly, unsafe. We are selling it for the land. I have another that burned down. OF COURSE a house that burned down is not compliant to code it burned down!!! To wring your hands over the obvious is just a good way to have the next buyer get the property.
Jeff- New York is an AS IS state also- and caveat emptor- and that is why these issues need to be addressed prior to contract.
J. P., those "as-is" properties can be a real surprise. I'm working with a first-time investor team right now. It has been a real treat because I'm taking them along as an investor looking for property. So, if I see something that will change the offer, they see it. If I wouldn't buy a property because of the neighbors, etc., they don't buy it. This is one time I get to live vicariously through my buyers and I kind of like it! 8-)
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in Southern RI and beyond
Phil, my last buyer on a foreclosure understood the 'as is' which is a first for me...but we pushed the bank anyway & they did a couple thousand in repairs...sometimes it is worth more than the paper it is written upon...as is homes just tickle my fancy!
Our entire regional sales contract just went As-Is. It's troubling a lot of Buyer Agents, but having worked the Short Sales for more than four years now, it's old hat to me.
Phil so many of our sales this past few years are sold as-is -period. Most are bank owned or short sales. We do have a specific addendum that deals with what 'As Is' means and what the buyers should do etc. Seller obviously do need to disclose but they get around by having 'no knowledge' of the property - never lived in home. For buyers it's of utmost importance to have a top notch inspector - and even with that it's tough to know if there have been more serious issues (mold etc). Buyer Beware. On the other hand....experienced buyers know what to look for and factor in the costs.
RETIRED / State License is Inactive - Portland, OR
Great post, but why apologize to Bill Clinton? I wouldn't.
In our contracts we have an "AS IS" clause and the properties aren't distressed. It just is the way it is to clearify that anything that is not adressed/negotiated in the real estate contract is being purchased as is.
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia
I often wonder about that. It seems invitation to buyers to just get out if they find something hideous on the home inspection. One of my pet peeves is the note that says, "As is." Translation: sure the oven doesn't work, but we are making it your problem. Oh, and the ice maker, disposal, the lights upstairs and all those scorched receptacles.
You wouldn't want someone trying to palm that off onto you! Why do it to someone else?
Jay, in the case of distress sales, the seller often cannot fix things. I have a listing that burned down. An offer came in contingent on "no violations." Now, call me crazy, but I'd call "no roof" out of compliance. But it is cheap and an opportunity, and that bad advice cost the buyer the deal, because a cleaner offer was right behind them.
In other cases like short sales, we have had sellers who were flat out broke- food pantry broke- and the buyers are Wall Street types who rained hellfire on them to fix a pipe that we already disclosed as being broken and factored into the price. Sellers who face foreclosure will do crazy things out of desperation, but that is not one of the things they should sell a car to fix. I had a knock down, drag out argument with the buyer's lawyer at the closing table over this once, and I am at peace that I was on the side of the angels.
In the case of a capable seller, no distress, I highly recommend they do a pre listing home inspection to evaluate what repairs are needed or what we can disclose. Termites might be a today fix. A 22 year old roof should probably be dislosed as being older and factored into the price.
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life
Love that you included the video of Clinton, too funny.
"As is" can be a nice deal for some folks ... but you better know what you are getting into. For a guy like me whose handyman skills are more limited than Whoopie Goldberg's vertical leap ... it would be a nightmare.
Julia B. Fee Sotheby's International Realty - Larchmont, NY
As Real as Real Estate Gets!
Hi - and your problem with shag carpet? Ha! I think we have all written "As Is" one time or another, and accepted a bid "As Is" too... just as you mention, it is up to us to complete our due diligence prior to our clients signing the contracts and deciding whether that extra shed makes a difference... I currently have a listing with a w/dryer that are 'As Is" Best, G
Phil, I love the title of this and the information is great. Accompanying your buyer to the township building is very important in this type of property.
As an aside, poor Bill. He'll never live that one down!
Finding that common element of what exactly "as is" means to a particular property is always something that everybody needs to figure out early on in a transaction as it can mean entirely different things to each party.
Philip -- as Jeff Dowler commented our California purchase agreement states all properties are sold in "as is" condition. I think this is a great way to introduce the subject of personal investigation and professional inspection to a buyer at the initial meeting --- better for them to know things upfront and be prepared for possible expenses and necessary updates/upgrades.
Phil Faranda is broker and owner of J. Philip Real Estate LLC in Briarcliff Manor, NY. Since founding the firm as a sole practitioner in late 2005, the team has grown to over 80 agents & closed 1000+ transactions valued at over $1 billion. He was 2014 President of the HGMLS and a 2017 Inman Influencer. This blog commentary is geared toward consumers and industry colleagues alike. You can reach him at (914) 723-8900. Warning: *Sarcasm and irony advisory at all times.*
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