Buy a house as it is? Pros and cons to consider

If you are looking for a home, you may come across properties listed as-is. This means that the seller will not make repairs or offer credits for defects and the buyer must be willing to accept the home as it currently is.

In this Redfin article, we’ll discuss what you need to know about buying a home “as is,” and whether it’s the right option for you. So whether you have a home in Raleigh, NCor into a mansion Baltimore, MDRead on to learn more about the term “as-is” in a real estate transaction.

What does ‘as-is’ mean when buying a house?

Stephen Keighery, founder of HomeBuyerLouisiana.comsays that “as-is” does not mean that buyers are ignoring the condition of the property. “It means the seller knows we won’t ask them to make repairs, renegotiate every problem, or hold them responsible for post-inspection problems.” He explains that his team still has a general contractor conducting a detailed evaluation of the roof, foundation, HVAC, electrical, plumbing, termite damage, moisture issues and the overall rehabilitation scope. As long as the repair costs make sense, they will proceed with the purchase.

When a property is listed and sold “as is,” this means that the seller will not make any repairs or offer credits for any defects in the home or grounds. Some examples of major defects that the seller does not have to correct are:

• Structural problems
• Leaking or defective roof
• Defective drywall
• Active termite infestation or damage
• Non-functioning systems (HVAC, septic system, etc.)
• Mold or mildew problems
• Presence of asbestos or other harmful materials

As a result, purchasing a property in its current condition is a serious decision for any buyer. In some cases, you may request an inspection of the property for informational purposes only, even though you are already contractually obligated to purchase the property.

Although unlikely, it is possible that sellers will agree to a home inspection contingencyallowing the buyer to withdraw from the contract if the home inspection reveals major problems. Whether this is still considered an “as-is” sale depends on state law, so check with a licensed professional.

What does it mean if some parts of the home are sold ‘as-is’?

Sometimes sellers identify specific aspects of a home that are being sold “as-is,” rather than the entire home. Common examples are:

• Fireplaces, chimneys and flues
• Detached buildings (sheds, garages, etc.)
• Household appliances (washing machine, dryer, refrigerator, etc.)
• Pools, spas, hot tubs

In this situation, “as-is” refers to aspects of the property that may or may not be functioning and that the seller will not repair or change as part of the sales agreement. Because this only applies to certain aspects of the home, it is often less risky for buyers. However, the risk level differs per real estate object.

What does “as is, where is” mean in a listing?

With the addition of ‘where-is’ the seller indicates that the property must be accepted at its current location. In real estate terms, ‘where-is’ effectively excuses any location errors. Some examples are:

• The property is located in a flood area
• The property has no intended use for its current use
• The property is or is scheduled to be taken by a government through eminent domain, right of way, easement, etc.
• The presence, or lack thereof, of restrictive deed covenants that limit what an owner can or cannot do on the property
• Inclusion or non-inclusion within a designated historic zone
• The property is located in an airport flyover zone
• The presence of a geological defect (inability to sense a septic system, elevated radon levels, shrinking soil, etc.)
• Title defects or disputes

Pros and cons of buying a house as is

If you’re considering buying a home as-is, there are pros and cons you should know about.

Benefits of Buying a Home “As-Is”

• Lower purchase price: ‘As-is’ homes are more often listed on the stock exchange and are sold for a lower price. They often need repairs, so sellers often factor this into the list price.
• Less competition: Buying a home as-is isn’t for everyone, so chances are there isn’t as much competition for the home.
• Possibly located in your favorite neighborhood: If you are looking for a home in a specific area or on a plot of land, purchasing an “as-is” home may be a good option.
• Additional resources for renovation: “As-is homes are often cheaper, meaning you may have extra money to make needed repairs and renovate the home to your liking.
• Faster home buying process: There is usually less room for negotiations between buyers and sellers, leading to a faster process.

Disadvantages of Buying a Home “As-Is”

• Health Dangers: One risk when buying a home “as is” is the potential for health hazards, such as lead paint, asbestos or mold. You may have to deal with expensive repairs to make your home livable.
• Hidden problems: While a home inspection may reveal some problems with the home, it is possible that there are even more problems.
• Additional costs: Due to hidden problems or health risks, you may be faced with expenses that you did not budget for.

Jonathan Cobey, CEO of CarolinaHomeCashOffersays “one of the biggest mistakes buyers make with existing homes is underestimating the true cost of repairs beyond what is visible during a walkthrough. Cosmetic problems are usually manageable, but the bigger risks often involve foundation problems, outdated electrical systems, plumbing problems, roof damage, HVAC systems or hidden water intrusion.” He recommends doing a thorough inspection and walking through the property with trusted contractors before committing, so buyers can build a realistic repair budget in advance.

• Inflexible salespeople: Often sellers are inflexible when it comes to negotiating or making concessions because they are aware that there are problems with the property. For example, they may be less likely to accept an offer with contingencies that could cause the buyer to withdraw from the sale.
• Financing hurdles: Some lenders may not agree to finance the home if there are serious problems with the condition of the home. With loans like VA or FHA, repairs may even need to be made before the sale can be completed. Buyers should confirm requirements with their lender.

Tips for Buying a Home ‘As-Is’

There is a lot to consider before purchasing a property as is, and one of the most important factors is that carefulness. Some examples of due diligence in an “as-is” sale include:

• Consult with a lawyer
• Have a title search performed
• Applying for the seller disclosure and read it thoroughly
• Examine the deed and land records for possible red flags
• Inspecting the home before signing a contract
• Inclusion of a provision in the contract that allows inspections and cancellation of the contract following any inspection findings
• Commissioning Inspection of wood destroying insects (termites). in advance
• Have a licensed contractor examine the home’s major structural components
• Then consider purchasing a home warranty

Derek R. Ballard of Inspection Gator Home Inspection advises buyers planning to renovate an as-is property to evaluate foundation, plumbing and structural issues before making any cosmetic improvements. Major structural or system problems can quickly eat up money intended for aesthetic upgrades. He recommends tackling the costly, essential repairs first before focusing on cosmetic changes.

Should I buy a house as is?

Buying a home as-is isn’t for everyone, so it’s important to understand what you’re getting into. In many cases, you may not have the option to walk away after the inspection, so make sure you are fully prepared for potential repairs and costs. Ultimately, you will have to decide whether the potential benefits of an “as-is” transaction outweigh the potential disadvantages and costs.