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Homes Sold "As Is"

By Elizabeth R. Elstien

Ever thought about buying a home that stated sold "as is"? Does it wave a red flag in front of your face alerting you that there are most likely problems -- perhaps major -- with the home? Most short sales and REOs state that no repairs will be done, essentially selling the home "as is". For a listing that is not a short sale or REO, where the lender/bank does not have a say in the sale, a home sold "as is" may be defective or the seller simply can't afford to make repairs. This may be problematic, but is not a reason to forgo the home purchase, especially if you really like it overall. After all, the problems may be minor or an item you would have remodeled anyway.

The seller in an "as is" sale, whether the homeowner or lender/bank, is informing the buyer that the property will be sold in its present physical condition. However, the seller must legally disclose all known defects to the buyer. The seller does not have to fix them, just disclose them. Therefore, selling "as is" does not negate claims of fraud, misrepresentation and disclosure.

As the seller, if you intend to market a property "as is", it is in your best interests to allow the buyer to have home inspections performed. This is true of short or REO sales, too, but the cancellation time frame may be more limited than with a regular sale. This shows the buyer that you, as the seller, are not hiding any possible problems and allows the buyer to rightfully know and understand all aspects of the property they are about to purchase. Inspections may include general home, structural, specialized pool/spa, roof or termite. In fact, courts place great weight on whether the buyer had the property inspected when making their decision in instances where the buyer brought a claim of fraud or misrepresentation against the seller. REO contracts in particular are worded to prevent these claims, as the bank/lender -- who now owns the property -- does not know the history of the home as did the former owner.

However, an "as is" alone clause written into the purchase contract does not mean the buyer cannot get out of the contract based on items of repair brought up in the inspection, even if a short or REO sale. Read the contract in detail to find out your time frame for canceling the contract if the repair items prove to be too much for your time or budget.

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About The Author

Elizabeth R. Elstien has worked in real estate for over 15 years as a real estate...

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