Is “As Is” Really “As Is” When Buying a Home?

At last, someone has written a cogent explanation of what the buyer should (or has a right to) expect when buying a house “as is.”

Frankly, I’ve been confused by the differing accounts I’ve read or heard — some say “as is” means that you pays your money and gets what you gets, no basis for price reductions (or later lawsuits)  if any repair needs turn up. Others say that you can still include an inspection contingency and ask for repairs — which makes one wonder, “In what sense is that sale ‘as is?'”

So, big thanks to Tara-Nicholle Nelson for her article “Buy real estate ‘as is,’ use inspection contingency,” syndicated by Inman News.  I haven’t been able to find the article online yet (I read it in the Montclarion), but it’s sure to turn up one of these days.

In the meantime, here are the most important points:

  • The meaning of “as is” varies by state.
  • In most states, it means the buyer takes the property “as disclosed.” So anything the seller revealed to the buyer ahead of time, such as a leaky roof, becomes something you cannot go back and negotiate over. Any surprises regarding the house’s condition, however, are fair game for negotiation.
  • In a few states, it doesn’t matter what the seller told you, “as is” means you accept the risk of flaws in the property.
  • Regardless of what state you’re in, insist that an inspection contingency be included in your offer.  That way, if the house’s repair needs turn out to be more than you want to take on, you can at least back out of the sale without losing your earnest money deposit. You might even be able to negotiate with the seller despite the “as is” clause, with the seller’s willingness to pay for repairs or agree to a price reduction dependent on how eager he or she is to sell. (But, as Nelson points out, it would be unethical to try negotiating over issues that were disclosed by the seller from the beginning. )

And, a final tip from me: Remember to choose an inspector with a reputation for giving houses a detailed once over. Get independent recommendations — some real estate agents, unfortunately, will recommend inspectors who soft pedal problems and therefore ensure that the deal goes through.