In the housing market, if someone sells you a lemon, squeezing out some lemonade could mean wringing out your wallet as well. Purchasing a house in “as-is” condition means that there are no guarantees from the seller on the home’s physical condition; you’re accepting any faults that might exist.
However, “not all as-is properties are distressed,” says real estate agent Katie Messenger of Bello Dimora Real Estate Network. Financial concerns are a common reason that sellers choose to list a home as-is, removing them from the responsibility of repairs and the sometimes costly fixes from home inspections. Or sometimes, the seller lives elsewhere and doesn’t want to deal with managing the repairs before selling.
“Other times the house is in good condition, and it’s an estate, so the executor may just want to sell the home and move on with as little hassle as possible,” Messenger says.
When buying a house as-is, how can you be sure you’re getting a deal and not a dud? Rocket Homes broker Rosanna Rivera shares what you need to know before buying a home as-is.
Insist on a Home Inspection
“Every single home buyer in America should obtain a home inspection before buying a home,” says Rivera. “Not only is a home inspection a crucial element, but as any real estate agent will tell you, it offers disclosures that an agent can’t provide.”
Even with a home inspection, the responsibility to disclose any known issues still remains with the seller. Obvious defects should be apparent in the home inspection; however, sellers must acknowledge any known hidden defects in the property disclosure form. If an expensive repair need is revealed in the home inspection that’s much pricier than what the seller originally disclosed, then the buyer has the option to walk away.
Check out our home inspection checklist to make sure that you review all potential repairs before buying a house.
Negotiate a Home Warranty
“A home warranty is a service contract that covers the repair or replacement of important home system components and appliances that break down over time,” says Rivera.
Not only can a home warranty help save you money, but it can help home buyers rest a little easier with one less expense to factor in the budget.
Getting a home warranty can be a no-brainer when purchasing a home in as-is condition, ensuring the home buyer peace of mind rather than worrying over expensive repairs.
Hire an Experienced Real Estate Agent
According to Rivera, “An experienced agent has the knowledge to explain the as-is purchase contract slowly and thoroughly so customers understand and have no fear of purchasing a property as-is.”
A seasoned real estate agent can help home buyers safely navigate the house-hunting process, avoiding potential money pits. “An experienced agent also can recommend service providers who can help obtain the right mortgage product, make home repairs, and so on,” she adds.
A great real estate agent can also help determine the best offer for an as-is property, factoring in the cost of repairs for which the buyer is responsible. Real estate agent Nancy Brook of Billings, Montana, recommends designating 10-25% of your budget toward repairs when buying as-is. Discover how to find the right real estate agent to fit your needs.
First-Time Home Buyer?
If you are a first-time home buyer, purchasing a home as-is might not be the best route for you. “As-is properties may not qualify for government-insured loans like FHA or VA,” cautions Brook. “To qualify for this type of loan, properties cannot have defects like roof issues, chipping paint or other major deficiencies.”
“FHA mortgages are very on-point about safety issues concerning plumbing, electric, lead paint, etc.,” says Denise Supplee, a Pennsylvania real estate agent. “Though you may believe you are getting the ‘deal of a lifetime,’ your mortgage company may not agree,” Supplee advises. Talk to a Home Loan Expert today to find a mortgage that fits your needs.
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