Should I Buy a Home "As Is"?
Should I
Buy a Property Without a Warranty?
Many home owners and banks sell their home without a home
warranty. To be clear, there are two
types of warranties involved when selling and buying a home: 1) the warranty by
the seller written in the contract you use to purchase the home, and 2) the home warranty provided by a third
party warranty company. What we are
talking about here is the home warranty provided by the seller in the purchase
contract. It is sometimes called selling
without section 10.2 of the REPC or selling the home “as is”.
Why Do
They Sell the Home Without a Warranty?
Your first thought may be “they must be trying to hide something if
they are selling the home without a warranty”.
But that is not usually the case.
In fact, they are required by law to disclose any known defects in the
Seller Disclosures. More likely, they do
not want to have to renegotiate the terms of the contract after the buyer does
the inspection. (see my article on “How
to Handle the Home Inspection” for more on this) Lets take a look at how section 10.2 reads
in the REPC.
10.2 Condition of Property. Seller warrants that the Property will be in the following
condition ON THE DATE
SELLER DELIVERS PHYSICAL POSSESSION TO BUYER:
(a) the Property shall be broom-clean and
free of debris and personal belongings. Any Seller or tenant moving-related
damage to the Property shall be repaired at Seller's expense;
(b) the heating, cooling, electrical,
plumbing and sprinkler systems and fixtures, and the appliances and fireplaces will be in working order
and fit for their intended purposes;
(c) the roof and foundation shall be free
of leaks known to Seller;
(d) any private well or septic tank
serving the Property shall have applicable permits, and shall be in working order and
fit for its intended purpose; and
(e) the Property and improvements,
including the landscaping, will be in the same general condition as they were
on the date of Acceptance. .
Why Would I Buy A
Home Without this Protection?
You can feel comforted when by the home without section 10.2
of the REPC and the seller’s warranty because of three items you will have in
place in most instances.
1) Seller
Disclosures protect you because they require the seller to disclose any
defects they know about the property. I
other words, the seller can not sell the property while trying to cover up the
hole in the roof.
2) Home Inspection protects you because
you have a professional that comes in and check about 200 points in the
home. Most of the time they can pick up
which part of the plumbing , HVAC, and cooling that is not in working order.
3) 3rd Party Home Warranty
protects you because it warrants the major systems in the home for one year
from purchase. They are in the $300-$500
range for 1 year of protection. They
warrant the electrical, plumbing and heating systems. Appliance add-ons cost extra and be sure to
read the fine print because in many cases they will not cover pre-existing
problems.
I hope this clears up
any confusion there might be about section 10.2 and the home warranty. If you are looking for a home, you can go
here and get signed up for a custom automatic email of homes as the come on the
market. And if you are looking to sell,
you can click here for a free comparative market analysis of your home.
;)
;)
