Dear Monty: 5 myths when selling or buying a home “ As-is “
By Richard Montgomery
Reader Question: My agent failed to list my home “ As-is, “ as I requested. The buyer now wants me to fix things their home inspector found. I don’t have the funds to do any repairs, which is why I specifically requested my house be sold “ As-is. “ What can my agent do to solve this issue that would not include me giving the buyer more credit than I already have agreed?
Monty’s Answer: The situation is a bit of a dilemma in that selling “As-is” is no guarantee a buyer will not ask you to negotiate. Assuming you accepted the buyer’s offer earlier, subject to an inspection, it appears that you have only two choices:
- Negotiate with the purchaser. Say “No”, or counter offer with something in between. You agent is the best person to give you a sense of what might happen, but many buyers do not do what the agent thought. When you counter-offer, you are rejecting the offer and making a new offer back to them. If the negotiation fails, you will have to find another buyer.
- Accept the offer and wait for the removal of other contingencies so the transaction can close. If you choose this option, it will be far better for you to give the buyer the additional money required to fix the repairs out of the closing proceeds. By negotiating this method into the transaction, you do not need cash before the end, and if the buyer does the repairs on their own, it eliminates them coming back afterward claiming your repairs were unacceptable.
You mentioned your agent failed to list your home as requested. Stating “ As-is ” in a property data sheet will not prevent a buyer from asking you to negotiate. If your agent admitted they made a mistake, and the customer is unaware that you are unable or unwilling to pay for repairs, consider having your agent make the buyer aware and ask them if they will withdraw the request before you make a decision on which option to choose. Also, consider asking the agent to participate in the cost of repairs.
“ As-is “ property can add confusion
Every state has their theories in the law they promulgate including the “ As-is “ concept. These state-by-state differences are part of the reason a fair amount of confusion exists about how the term “ As-is ” works in a real estate transaction. Remember to consult with your attorney or a real estate agent, as the law is different in every state. Here are four more “ As-is ” myths:
- The buyer cannot offer with an inspection contingency on an “ As-is “ property. The “ As-is ” clause is the seller’s way of putting the buyer on notice that it is the buyer who is responsible for determining the condition of the property. Although there are circumstances where a seller has good reason to sell “ As-is “, such as memory loss, no money to fix or repair, or never lived in the property, the “ As-is “ clause can often be a red flag. If an adverse material fact is discovered later without asking for an inspection, the buyer may have a difficult time later claiming the seller damaged them. The buyer should always request an inspection. Then, if the seller rejects the inspection, and the buyer proceeds but later finds a material adverse condition, the fact the seller would not grant the inspection may find support in certain situations. A well-written inspection contingency provides the buyer an out if an adverse material fact discovered on the inspection sours the buyer’s enthusiasm.
- An “ As-is “ seller is not required to disclose. It is illegal in most every state for a home seller to conceal or withhold material adverse facts affecting a property that would be difficult for a buyer to discover otherwise. Consider checking with your attorney before entering into an “ As-is “ transaction.
- The listing agent does not have to inspect the home. Property sold “ As-is ” still need the agent in many, if not all states, to carefully carry out a physical inspection of the home.
- The listing agent doesn’t have to tell a prospect an “ As-is “ home has defects. Most states require the listing agent to make timely disclosure of material adverse facts to the parties, sometimes in writing.
There may be other circumstances in individual transactions not addressed in this column. For example, some “ as-is “ sellers will not prepare a seller condition report. When working with an “ As-is “ seller take extra steps to understand the condition of the property.
“Richard Montgomery gives no nonsense real estate advice to readers most pressing questions. He is a real estate industry veteran who has championed industry reform for over a quarter century. Send him questions at DearMonty.com.”