Doozy or a Dud? Buying a House As Is

Is buying a home in "as-is" condition worth the risk?

For some, it's a siren's call, begging to be answered; for others, it is a warning to stay far, far away. While sometimes it may indicate the mark of a great deal, it could also be a fair warning to abandon all hope before entering. If you are looking in to buying a house, it's important that you know what "as-is" really means.

With the rise in foreclosures and bank-owned properties over the last decade, the term "as-is" has become a lot more common. Just as with used vehicles, "as-is" is an indicator that the seller makes no promises about the condition of the house. If you are interested in buying a house labeled "as-is," you can certainly perform an inspection, but those two words are there to let you know that no matter what your inspection finds, the seller is not going to be fixing it to your liking.

In some cases, like when the bank is selling the home, selling "as-is" is simply the bank's way of communicating that they don't know enough about the house. The previous owner may know that the basement leaks, but the bank may not have any way of knowing that. Sometimes "as-is" may be tagged on to a house listed by those who have inherited the house and are looking to move it quickly. They may simply not have the money, time or interest.

What "as-is" doesn't mean, however, is that the seller doesn't need to disclose anything they already know about the property. That would be considered fraud.

It's pretty clear, then, what the risks might involve when choosing the buy a home "as-is." If you decide to roll the dice, it's important to still have an inspection done. Of course, "as-is" also offers benefits for the seller.

• Instead of hiring a more costly inspector, you may be able to get away with just having your contractor perform a walkthrough to apprise you of any major problems.
• "As-is" homes generally sell for $5,000 to $10,000 less than a regularly-listed home in consideration of the risk a buyer is taking.
• If it is a bank sale, you might find that they are willing to work with you on repairs in order to sell the home, especially if it's been on the market a while.
  
  

The gigantic risk is that even with an inspection and required disclosures, you may not find something major that will impact your financial position. Termite damage, seasonal issues or leaky roofs may not rear their ugly heads until well after you've committed to buying a house.

In the end, if you are considering buying an "as-is" home, it's important to consider both the pros and the cons. Bottom line, a home listed "as-is" shouldn't automatically trigger your flight response, but it's also imperative to go in with your eyes wide open. If you plan on doing any repair work yourself, you might be able to avert the risk of your new home turning in to a money pit.

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