Buying A Home 'As Is': The Pros And Cons
Friday Feb 03rd, 2023
Buying a home ‘as-is' can be enticing.
For those who’ve been struggling to get into the market, the price point can be more affordable. When supply is low (as in our current market), it can be a viable avenue to explore. However, it’s important to know that the decision to buy a home as-is works for some, but not for everyone.
Buying a home as-is means “the homeowner is selling the home in its current condition, and will make no repairs or improvements, before or after closing, Essentially, what you see is what you get, but what you don’t see is also what you get.
When the correct steps are taken, buying a home this way could be a calculated and worthwhile risk that pays off, but not everyone will
have the same experience: the Seller isn’t warranting anything about the home and they are not going to be making any fixes or repairs.
Buying a home as-is comes with its own unique set of benefits and challenges.
When Buying ‘As-Is' Could Be A Good Idea
There are several reasons why the property may be sold as-is. Homes sold in as-is condition don’t necessarily mean they’re faulty. Sellers may want to sell a home as-is because they want a smoother transaction with less hassle, or they may be a beneficiary and are in no position to warrant anything as they’ve never even lived in the home before.
As-is properties offer opportunities to Buyers and some of the pros include the price because it allows a Buyer to enter the market when they may not have been able to, otherwise. Timelines are also appealing as the majority of these properties are vacant and prefer a quick closing, allowing the Buyer the opportunity to acquire the property relatively quickly. For those who are handy and have contacts to assist in the renovations, this could be a chance to increase the value of the property and look to refinance and engage in the next project or investment, with the equity.
Additional circumstances where buying as-is could be the best move could also include when a Buyer who knows their plans are to gut and fully renovate the property. In that case, having the Seller warrant any repairs or guarantee everything is in working condition is unnecessary,
There are specific instances when an as-is sale is advantageous, but knowing exactly what’s being bought is crucial. The only way for the Buyer to ensure they’re “in the know” is by having a home inspection so there aren’t any avoidable surprises down the line. The Buyer can still have their home inspection, however their offer cannot contain any clause that makes it conditional upon a satisfactory home inspection.
When Buying As-Is Might Not Be A Good Fit
It’s a very wise decision to have a home inspection done so there’s a clear understanding of exactly what the Buyer is getting into. Knowing what repairs are required upfront, as well as the cost, is a must. As-is properties tend to have an attractive price point, but that doesn’t mean potential Buyers should blindly launch themselves at the opportunity. Refurbishments can add up and become costly, especially if upgrades have to be made at a structural level.
The cons, and I cannot stress them enough, would not be having the property inspected prior to an offer being made or during the conditional period and closing on the property only to find out there are an array of deficiencies and major issues. The responsibility would fall on the Buyer, as the new owner, to fix any defects. The home inspection can be done at any time - but not included in the offer as a Condition because the responsibility for everything lands on the Buyer.
The mindset of the Buyer is also very important. If they’re not handy, tackling DIY projects that could jeopardize their safety and that of others around them. It could end up costing more money in the long run if or when professionals need to be brought in to rectify the problem.
Is Buying A Home As-Is For You?
As they say, there’s a home for everyone, but not every home is the one. Despite the compelling price point, buying a home as-is can become a financial burden, but it’s certainly not all doom and gloom when it comes to these types of properties. Secure an inspection and build a clear understanding of the work and costs of what the purchase will entail.
When we work together to find out your personal boundaries when it comes to taking risks and, if you find an as-is property you’re interested in, my responsibility is to find out why the seller has listed it that way. It may be worth the potential payoff, however, the stress and headache could be big deterrents. Together we can determine what’s best for your situation and make sure you land in a home you love.