Dear Pat, What Does "As Is" Really Mean?

Reblogger Roy Kelley
Education & Training with Realty Group Referrals 16766

Pat Kennedy provides some good advice for home buyers that are purchasing a property in as-is condition. There is nothing wrong with a final effort to negotiate before walking away from the opportunity. The seller probably expect it.

 Happy New Year from your friend in Montgomery County, Maryland.

Original content by Patricia Kennedy AB95346

Q:  Dear Pat, last week we had a contract on a house accepted.  It has an "as is" clause, but allowed for a home inspection.  Unfortunately, the inspector came up with some huge surprises that the sellers did not include on the property disclosures, and we felt a little blind sided.  But we still love the place.  What are our options at this point?

A: No doubt about it!  A home inspection can open up a great big old can of worms!

If you read the "as is: clause combined with the General Inspection Contingency that is usually used along with it, you would think you had only two choices:

  • You could accept the house in it's funky condition and deal with it after settlement at  your own expense; or
  • You could walk away from the contract by just declaring it null and void.

But you really do have a third option, one that I have often suggested that buyers use.  There is nothing to prevent you from going back to the sellers with a copy of the inspection report and a request that they remedy the undisclosed condition or reduce the price of the house so you can do it after settlement. 

If there are other offers on the table, you will void your contract by asking for repairs, notwithstanding the "as is" clause.  And the sellers will be free to just say no and move onto the next set of buyers.

Usually, however, the sellers will work with you on this.  First of all, they can no longer argue that they were unaware of the problem.  If they say no to your request, they should amend their disclosure forms so any future buyers will be aware of the problems when they make their offer.  And it's likely they will have to fix whatever it is or reduce the selling price to reflect the property condition.  So they might as well do it for you.

And, by the way, I never use the General Inspection Contingency, even with an "as is" clause.  There is another version. a Specific Inspection Contingency,  that allows you to go back with a request for repairs without voiding the contract.  The sellers can still just say no to your request, but they are not free to accept another offer unless you decide to walk away after they deny your request.

And you should remember that I am not talking about minor repairs, like a dripping faucet or improperly grounded electrical outlets.  The reason sellers request as "as is" clause in the first place is to avoid having buyers come back with ten pages of nickle and dime repair requests.  I'm talking about major things.

Here's what I recommend:  if the seller has disclosed anything that is a problem, you don't go back and ask them to repair it.  You knew when you made the offer about any disclosed funky stuff.  And if it's something minor, let it go. 

But if there is something they didn't mention that is a health or safety hazard that will be difficult to fix, I don't have a lot of sympathy for the sellers - especially if they knew about the situation and didn't disclose it.



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