The Pros and Cons of Co-Buying a Home With Friends or Family
It's the holidays and as families come together, dinner table discussions are including purchasing homes as a family, whether as a primary dwelling or vacation home.
There is a lot of competition when buying a home nowadays. It is one of the strongest seller's markets we've ever seen in the real estate industry. The inventory of available homes is at a record-breaking low. Buyer demand for homes is extremely high. Home values are rising. Buyers are writing offers considerably above list price and they are writing other terms in their offers that are attractive to sellers. One of the terms buyers are writing into their offers is that they are willing to purchase the homes "as is." Many real estate contracts have this provision written in as an optional paragraph. The buyers and sellers need to initial the paragraph to make it part of the contract terms. When buyers and sellers agree to this term, there is sometimes a bit of confusion as to what it really means.
Buyers Can Still Have Home Inspections Performed
One of the biggest misunderstandings of purchasing a house "as is" is that buyers can still have as many home inspections performed as they wish. Sometimes sellers think that "as is" means that the buyers are waiving the inspections. This is simply untrue. In fact, real estate agents should always recommend that their buyers have inspections to avoid liability. These may include whole house inspections, radon inspections, mold inspections, pest inspections, lead-based paint inspections, sewer inspections and the like. When buyers have these inspections performed, it gives them important information about the condition of the homes they are purchasing. It also helps them confirm that the home values are in line with the condition of the homes.
Buyers Can Still Ask For Issues to be Repaired, Replaced or Remediated
Even though the buyers have agreed to purchase the home "as is," if there are major issues found during the inspections, or major defects, they can still ask for these issues to be repaired, replaced or remediated. If there's an attorney review contingency in the contract, they can also ask that their attorney not approve the contract so they can get out of the transaction entirely. Sellers may not think this is very fair. However, it's the legality of the situation.
Sellers Are Still Bound to the Residential Disclosures
When sellers list their homes for sale, they fill out and sign a Residential Real Estate Disclosure form. This form is for sellers to disclose if they are aware of any major defects in the home. These defects are listed on the form, and sellers check "yes," "no" or "not applicable." Many states also require a Radon Disclosure form, which is where sellers disclose if they are aware of any unacceptable or unsafe levels of radon in the house. Some states require a Mold Disclosure form. If the home was built before 1978, a Lead-Based Paint Disclosure form is also necessary. If buyers offer to purchase the home "as is," sellers are still bound to disclose any major defects they are aware of or become aware of before closing.
What's the "As Is" Advantage?
When buyers offer to purchase the seller's home "as is," it usually means that they are willing to overlook minor defects and other minor issues found in the home inspections. Many buyers, especially in a buyer's or more balanced market, can get quite picky and request that minor defects and other minor issues found in the home they are purchasing be repaired, replaced or remediated.
Buying a home "as is" is a way for buyers to obtain an advantage when they are making an offer on a house. This is especially true in multiple offer situations. It's always best to consult with and retain an attorney in states where real estate attorneys are the norm.