If you’re shopping for a home, you may come across properties listed “as-is.” This means the seller isn’t making repairs or offering credits for defects and the buyer must be willing to accept the home exactly as it currently is.
In this Redfin article, we’ll cover what you need to know about buying a house “as-is,” and whether it’s the right option for you. So, whether you’re buying a home in Raleigh, NC, or a townhouse in Baltimore, MD, read on to learn about the term “as-is” in a real estate transaction.
What does “as-is” mean when buying a house?
When a property is listed and sold “as-is,” it means the seller will not make any repairs, nor offer any credits for potential defects of the home or grounds. Some examples of major defects that the seller doesn’t have to correct include:
- Structural problems
- Leaking or faulty 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, agreeing to purchase a property “as-is” is a serious decision for any buyer. In some instances, you may request an opportunity to inspect the property for informational purposes only, even though you’re already contractually obligated to purchase the property.
While unlikely, it’s possible that sellers may agree to a home inspection contingency, which allows the buyer to back out of the contract if the home inspection reveals major issues. 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 may identify specific aspects of a home being sold “as-is,” rather than the entire home. Common examples include:
- Fireplaces, chimneys, and flues
- Detached structures (sheds, garages, etc.)
- Household appliances (washer, dryer, refrigerator, etc.)
- Swimming pools, spas, hot tubs
In this situation, “as-is” refers to aspects of the property that may or may not be functioning which the seller will not repair or change as part of the contract of sale. Because this applies only to certain aspects of the home, it’s often less risky for buyers. However, the level of risk varies by property.
What does “as-is, where-is” mean in a listing?
With the inclusion of “where-is,” the seller indicates that the property must be accepted in its current location. In real estate terms, “where-is” effectively excuses any potential locational faults. Some examples include:
- The property is in a flood zone
- The property is not zoned for its current use
- The property is or may be scheduled to be taken by a government by eminent domain, right-of-way, easement, etc.
- The presence, or lack thereof, of restrictive deed covenants limiting what an owner may or may not do upon the property
- Inclusion, or non-inclusion, within a designated historic zone
- The property lies within an airport flyover zone
- The presence of some geological defect (inability to perc a septic system, elevated radon levels, shrink-swell soil, etc.)
- Title defects or disputes
Pros and cons of buying an “as-is” house
If you’re considering buying an “as-is” home, there are benefits and drawbacks to know.
Pros of buying a house “as-is”
- Lower purchase price: “As-is” homes are more likely to be listed and sell for a lower price. They are often in need of repairs, so sellers often account for this in the list price.
- Less competition: Buying an “as-is” house isn’t for everyone, so there’s a chance there won’t be as much competition for the home.
- Potentially located in your preferred neighborhood: If you’re looking for a home in a specific area or on a plot of land, buying an “as-is” home may be a good option.
- Extra funds to renovate: “As-is” homes are often less expensive, meaning you may have additional funds to make needed repairs and renovate the home to your liking.
- Faster homebuying process: There’s typically less room for negotiation between buyers and sellers, leading to a faster process.
Cons of buying a house “as-is”
- Health hazards: One risk of buying a home “as-is” is the potential of health hazards, like lead paint, asbestos, or mold. You may face costly repairs to make the home livable.
- Hidden problems: While a home inspection may reveal some issues with the property, it’s possible that there may be additional problems.
- Additional expenses: As a result of hidden problems or health hazards, you may face expenses you didn’t have the budget for.
- Inflexible sellers: Often, sellers may be inflexible when it comes to negotiating or making concessions, as they are aware that the property has problems. For example, they may be less likely to accept an offer with contingencies that allow the buyer to back out of the sale.
- Financing hurdles: Some lenders may not agree to finance the home if there are serious problems with the home’s condition. Loans like VA or FHA may even require the repairs to be made before the sale can be completed. Buyers should confirm requirements with their lender.
Tips for buying a home “as-is”
There’s a lot to consider before buying an “as-is” property, and one of the most important factors is due diligence. Some examples of due diligence in an “as-is” sale include:
- Consulting with an attorney
- Having a title search performed
- Requesting the seller disclosure and reading it thoroughly
- Examining the deed and land records for potential red flags
- Inspecting the property prior to signing a contract
- Including a provision in the contract that allows for inspections and cancellation of the contract as a result of any inspection findings
- Commissioning a Wood Destroying Insect (termite) inspection in advance
- Having a licensed contractor examine the major structural components of the dwelling
- Consider purchasing a home warranty
Should I buy a home “as-is?”
Buying a house “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 opportunity to walk away after inspection, so make sure you’re fully prepared for potential repairs and costs. At the end of the day, you’ll have to decide if the potential benefits of an “as-is” transaction outweigh the potential downsides and expenses.