It means there are no guarantees from the seller that everything’s in working condition, and they’re not required to provide a Seller’s Disclosure. If you buy an “as-is” home and later find major problems, you’re responsible for the repairs.
“As is” language in a realty sales contract does not shield a seller or his agent from liability for affirmative or, as in this case, negative fraud. “Generally speaking, such a provision means that the buyer takes the property in the condition visible to or observable by him.
Here are some other examples of issues a real estate agent must disclose to prospective buyers:
- Evidence of a structural defect like a significant crack in the foundation.
- The appearance of mold, either past or present, in the home.
- Termite damage.
- The roof has leaked, or a prior ice dam caused damage.
- The radon levels in the home are higher than the acceptable EPA limit.
- Major plumbing or electrical issues.
- A significant external issue such as obnoxious noise levels.
- A known legal issue such as a cloud on the title or the property is a short sale.
So how can “as is” be the aforementioned opportunity, if the buyer is taking on all those problems?
It all comes down to cash value. Those two short words in a listing usually indicate that the home may be considered to be a fixer-upper. The house will have a relatively low list price to start with, and the sellers might even entertain still lower offers.
A real estate agent may even list a house with serious problems as “cash offers only,” if the house’s problems could prevent it from qualifying for a mortgage.
If the prospective buyers happen to be contractors or handy with a hammer, are looking for a property to flip, or maybe just want an extreme bargain, the promise of an as-is sale could be music to their ears.
Cash buyers and corporate investors look for home sellers who want a fast sale, but they expect those sellers to offer a low list price in exchange.
Yet the downsides of an as-is property are obvious and should not be underestimated. Any number of things could be wrong with the house that are not immediately apparent to the eye. Buyers might think they’re getting a killer deal, but they could also be throwing their life savings into a black hole.
How long are you liable after selling a house?
Normally a buyer would have six years in which to bring a claim against you, although in certain situations it could be three years from when the buyer becomes aware of a problem.
What happens if you lie when selling a house?
Misleading a buyer, whether intentional or not, could be a breach of the Misrepresentation Act. This means the seller can pursue you for compensation. The onus is on the seller to prove they did not mislead the buyer. If they can’t the most likely outcome is that damages will be paid to the buyer.