There are numerous scenarios in which a seller might list their property in as-is condition. Buyers purchasing from a lender who foreclosed on a property or an estate may notice language indicating that they agreed to purchase the property as-is.
Essentially, the seller does not provide any kind of warranty or promise regarding the condition of the property. Even those listing a home where they have lived might attempt to sell the property as-is. The goal of such listings is to mitigate any risk to the seller related to issues with the property.
What are the risks that a buyer assumes when purchasing a home listed in as-is condition?
Not knowing about property issues
Typically, those who have lived at a property for years have insight into any repairs or maintenance that the home may require. Buyers expect sellers to disclose that information. Technically, an as-is listing does not protect a seller from claims that they misrepresented the property.
In fact, real estate statutes in both New Jersey and New York require the written disclosure of all known defects, including latent defects that can be hard to identify. Simply listing a property in as-is condition does not eliminate the obligation to disclose property issues. Buyers may have a harder time recognizing potential issues if a seller does not point them in the right direction early in the transaction.
Overpaying for the property
In scenarios where sellers do not know the condition of a property to disclose it to a buyer, as might be the case when buying a home repossessed by a lender through foreclosure, they may list the property for an inappropriate amount. The goal is typically to maximize the proceeds from the sale, but the price may not realistically reflect the property’s condition.
Inspections and appraisals can help buyers find issues with a property that could affect what it is actually worth. Without a professional’s insight regarding the property’s condition, a buyer might agree to an unfair price. Of course, the inspection process occurs after making an offer.
Buyers about to make offers on as-is residential properties may need to include contingencies in their offers so that they don’t end up obligated to complete a transaction where the price does not accurately represent the condition of the property. Understanding the risks inherent in acquiring real estate listed in as-is condition can help buyers protect themselves and make smarter choices about what they offer.
