Should I approach a home being sold ‘as is’ any differently from other listings?
Buying a home can be a very emotional experience. There’s the excitement of finding a place that meets your needs and wants, the stress that comes with such a big purchase and the uncertainty about whether you’ll be able to come to terms with the seller and land your dream home.
Some people will decide to place an offer because they “fall in love” with the home; if you find yourself falling in love with an ‘as is’ property, prepare yourself for accepting the home in its current state, faults and all.
That’s not to say a home listed for sale in an ‘as is’ condition is necessarily in a state of disrepair; it simply means it’s being sold in its current condition and, unlike a typical sale where there may be some wiggle room during negotiations, the seller won’t be making any repairs to complete the sale. That said, don’t expect to get a bargain on an ‘as is’ property – they don’t necessarily sell at a lower price than comparable properties in a similar condition in the neighbourhood.
The main reasons a seller may opt to sell the property ‘as is’ is if they don’t have the time or money to make repairs (for example, selling on behalf of an aging parent), or they aren’t familiar with the condition of the home. A good example would be in a Power of Sale where the bank sells a property because the homeowner can’t pay the mortgage; in this situation the bank isn’t in a position to give warranties on the condition of the home and they probably aren’t going to put money in to fix it up.
As with any home you approach, the only way to know its condition is to have it inspected by a qualified home inspector, engineer or contractor who can identify underlying problems with the home’s major systems, like heating/air conditioning, electrical, roofing, foundation, plumbing and septic systems. Talk with your real estate professional about including a clause in your offer subject to your satisfaction with the inspection results. As long as the clause is properly drafted by your real estate representative or lawyer, you’ll be able to walk away from the deal if the inspection uncovers a budget-busting issue you aren’t willing to address. Choosing to skip an inspection can add thousands of dollars to the total cost of the home. For example, we know of a case where an inspection wasn’t done and the subsequent discovery of problems with the roof, which would likely have been identified during an inspection, meant $10,000 in additional costs for the buyer.
Be aware that there may be more issues of insurability with an ‘as is’ property as compared to a typical listing, though a proper inspection with satisfactory results may address that risk. Nevertheless, you should talk with your home insurance broker or agent in advance. When it comes to closing the deal, you should seek legal advice if there are any questions that your real estate professional cannot answer to your satisfaction. It’s their responsibility to seek or refer you to outside professional advice if it’s appropriate. Be sure to ask questions – the last thing you want when buying a home is a surprise (unless of course it’s a valuable piece of art or other treasure you find during renovations).Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.