"As Is" Always means MAYBE!

I have found the best way for sellers to get an "as is" sale is to have a pre-listing home inspection and then refer to the inspection in their property condition disclosure.

Texas has already been mentioned, but I'll chime in as well. ALL Texas contracts are "as is". They are "as is" or "as is with these repairs made".  Then, the buyer can run inspections and if there is anything wrong with the house that wasn't disclosed nor visably seen, the buyer can ask the seller for repairs.

If the AC is broken and disclosed and the Roof is leaking and disclosed, the price is already set accordingly, so having an inspection and then asking the seller to repair these things is ridiculous... UNLESS it's required by the buyer's lender, and then the buyer can't buy the house at all unless repairs are completed prior to closing, but who pays for those repairs is negotiable.

I recently presented my buyer on an 'As Is', bank owned home. The seller/bank required an electrical outlet repair and charged my buyer for the repair. The fine print of the banks sales addendum stated the buyer must pay for any repairs recommended....even in an 'as is' sales contract. I always thought the buyers FHA loan was the only one to ask the buyer to make repairs.

Bryant... Great post!  Being from NY we too have an "as is" clause and it is interpreted the same way. I have to beg to differ with comment #20 who said the home inspection is doe before contract.  An inspection is done after both parties agree to the offer and sign the offer at whigh point it becomes a "contract". I don't know of any of the agents that I have worked with that would encourage a buyer to do the home inspection before that happens.

 This Contract is contingent upon the Buyer(s) obtaining, at Buyer(s) expense, a

satisfactory Home Inspection by a New York State Licensed Home Inspector, Architect or Engineer within _____

calendar days of the last of the Buyer(s) and Seller(s) to accept the Contract ("Inspection Approval Period"). This

contingency shall be deemed waived unless Notice that the Home Inspection is unsatisfactory is received within

the "Inspection Approval Period", in which case this Contract shall be deemed terminated. If the Contract is

deemed terminated, Seller directs and authorizes the holder of the Deposit to return it to Buyer. The Buyer(s) will

supply the Seller(s), if requested, a copy of the Home Inspection Report.

I have a listing now that sold as is (REO) seller states inspection for informational puposes only will not reduce or do repairs.  Upon inspection found the roof to be on last legs, guess what seller willing to negotiate.

Bryant,

Great post!  I agree with William way up there in the first comments.  I sell Commercial now but when I sold Residential, the biggest problem was the Agents did not read their own contracts.  They were surprised when the words "As Is" actually meant "As Is".  We don't call the Vendor to change the athlete picture on Wheaties if we don't like the picture.  If we want Wheaties for breakfast, then we take it "As Is".

No repairs are made except in possible cases where discovery is not readily available - like behind a wall, etc.  Still, most of the time they won't repair anything unless an appraiser makes mention of it being needed.

If As Is doesn't mean As Is, then why have an As Is clause?

In AZ our contract has a warranty item section which includes electrical, mechanical, plumbing systems, etc. The seller agrees in the contract to fix any warranty items found, but is under no obligation to fix any non warranty items.

The As Is addendum specifically wipes out the obligation to fix any warranty items.

As Is can be a negotiation tool for the seller when a buyer is wanting a lower price. The seller can accept the lower price in exchange for the buyer to accept the property As Is, where buyer will not make any repairs.

Inspectors are going to find things that the seller was not aware of, but that doesn't give the buyer the "right to renegotiate" the contract. The only contractual right the buyer has is to accept or cancel. The seller has no obligation to renegotiate, or to fix anything in an As Is sale.

Whether one or both parties choose to agree to renegotiate is a different story. I'm only talking about the contractual rights.

Yes, Lloyd, #26 says it like it is here in our area of California. The system works well. The fact that the seller has gotten inspections done doesn't preclude the buyer from doing the same during a contingency. Only once did two pest inspectors find a major difference; we negotiated the difference and buyer/seller split the cost, remained cordial, and both were delighted with the transaction.

Bryant,  this is an educational post.  There is no harm in asking for a repair and a Seller has the right to decline the repair.  Nothing ventured, nothing gained.  Joni Saples did a good job addressing our Texas contracts.

Hi Bryant,

Just had a closing on a bank owned home last week. Serious fixer. 11 offers.

Selling agent called - "When is the broken down camping trailer going to be removed from the yard?"

Me - "As Is, actually means - AS IS!"

Phil

Hi Bryant.  To me, "As Is" simply means Buyer Beware.  Beware because the seller either does not want to repair anything, can't afford to repair anything or doesn't know the condition of the property because it's an REO, Probate or Receivership listing.  In that case I make sure the buyer does a home inspection and yes the buyer may ask for repairs.  It really depends.  If the inspector finds something major like a plumbing or foundation problem, etc. the buyer and sometimes the lender wants it repaired.  So now, that previously unknown defect has been brought to the forefront, it has to be disclosed to the next buyer if my buyer cancels

Great explanation.  "As is" really means "as disclosed" (at least that's the case here in CA).  If I were a seller and the buyers found out items during inspections that made them think about canceling or asking for a credit or repair, I would certainly rather have them ask than walk away.  If a seller wants to be adamant about stating that their home is an "as is" sale, then they have to be prepared that the buyers are going to think that something is wrong with the home.  If the sellers truly want an "as is" sale, then yes, getting an inspection before putting their home on the market isn't a bad idea but they have to be prepared for the results...      

Often my customers will ask me if they should demand the seller take care of the issues I show them when the Realtor does not stay for the inspection (Why?).  I always tell them to talk to their realtor but that from what I have heard, many times "as is" is just that and many times it is still open for discussion.

I can tell you what "AS IS" really means!  Having bought three properties from the Federal Government (two from the US Marshall's Service and one from the IRS), I can assure you that the FEDs think that "As Is" means literally, that "You Take it As Is, and Assume ALL responsibilities and Liabilities associated with any current, visible, latent, hidden, or invisible defects, codes issues, zoning problems, etc. whether we disclosed them to you or NOT". 

Case in point: we bought a beautiful 11 acre tract near Keystone Heights, FL which was a US Marshall's auction property.  The online auction listing showed a SW mobile home, including photos and a floor plan, so we thought it was suitable for rental property.  The day after we won the auction, while in the pre-closing period, we jumped the fence (the gate was locked) and discovered to our horror that the mobile home had broken-out windows, graffiti inside and out, missing all appliances, and was mold-laden and roach-infested.  We cancelled the sale, citing Johnson v. Davis, a famous case that went all the way to the Florida Supreme Court.

The same property went back to auction a few months later, and we bought it for $30K less, knowing that the mobile home was a liability and would need to be demolished.  The day after the closing, we opened up the locked shed on the property with the new keys, and found a staircase leading UNDERGROUND to a demolished drug lab that was the size of a two car garage, totaling 650 sq. ft.  It was completely concealed. 

We later learned from the local county codes enforcement officer that their file had a "red flag" on our parcel, due to this - that the underground area, was an "unapproved structure".  My question to them was: "why did you not make the FEDS tear it down when they owned it for 3 years?"

Long story short - we told the codes guy that we planned to keep it, clean it out and use it for a storm shelter.  It tooks lots of effort - the lab had 5 separate rooms, with potting soil, Pvc tubing wiring, dirt, mold, everywhere... but, we donned Tyvek suits and respirators and tore all of that out of there and tossed it.   We now have one of the few former underground drug labs converted into a nice basement/man cave/storm shelter.  It came in real handy a few months ago, when a tornado warning was issued at 3 am in the morning.  My daughter had an underground dance party with her friends for her 16th birthday.

But, in this case, "As Is" meant that I ending up spending about $7500 to demolish one entire underground drug lab, one 70 ft. Single wide and pick up all kinds of debris scattered everywhere.  It took weeks of sweat equity.  The good news is that I now have a really nice vacation getaway, that we enjoy quite often.

If that's not the epitome of "As Is Where Is", I don't know What Is.

Great post! You seem like a rational and reasonable person. I wish all of my transactions took place between rational and reasonable people.

I love the way you look and both sides and spell it out what "as-is" means to each party. It is really important to have these types of conversations with prospects and clients.

Thanks for a really relevant post.

Even in and "As Is" situation, it never hurts to ask; sometimes the answer will be "yes"!

That #107 was a good story. I got burned once a long time ago and now I always check with the county before I or anyone else buys a property.