Dear Sue,
I heard that the homes being offered for sale “as is” are the best deals. I have been watching the foreclosures and they are all listed “as is.” I would really like to make an offer but I am afraid of being stuck with costly repairs that I can’t handle.
I have heard stories about these “as is” properties being completely stripped of electrical, plumbing, appliances — everything. I have also heard that properties that appear perfectly fine have problems that show up later.
How can I take advantage of these good deals and not end up with something I regret?
— Wary Walt
Dear Walt,
Many people are under the impression that homes being sold “as is” can’t be inspected. And if they are inspected, they think that they are stuck with the problems they find.
Not true! If you find a property that you like, make an offer subject to inspections and investigations.
Allow plenty of time for a pest report and a thorough professional home inspection. Check the status of the property with the building, planning and environmental health departments.
Most inspection periods are 17 days. If you discover something that isn’t working, have a licensed contractor give you a written repair estimate. Attach the estimate to an addendum requesting a credit or reduction in sales price by the amount of the estimate.
Keep in mind that the seller is not obligated to give you a credit. If you are not satisfied with the inspections and the seller refuses to give you a credit you can cancel the escrow without penalty as long as you do it within your inspection period.
If the seller refuses to allow inspections, go on to the next property. A seller that won’t allow inspections spells trouble!
If you find an “as is” property that requires extensive repairs and/or remodeling, make your offer subject to a construction or rehab loan. The total amount financed will include the purchase price and the cost of rehab. You will finance the repairs along with the purchase price over 15 or 30 years.
A reputable real estate agent will assist you with determining the market value. They will also provide names of licensed contractors and lending sources. They are also experts at managing the transaction.
Understanding that “as is” doesn’t mean forgoing inspections and being stuck with a can of worms is a matter of good Home $$$s and Sense.
Sue Thompson is owner and sales manager of HomeTown Realtors. She can be reached at seesue@seehometown.com, or on the Web at www.homedollarsandsense.com.