By Kristina Mattson
Buying a home — whether a primary residence, vacation home, or investment — is one of the largest purchases most people will make in their lifetime and that can create some stress. Buying a home “as-is” surely can add to that stress; but what exactly does that really mean?
“As-is” is defined in the California Residential Purchase Contract as the present physical condition as of the day of acceptance unless otherwise agreed upon in writing in the purchase contract. However, the seller is still obligated to disclose all material facts and defects of the property, and the buyer has a right to do any investigations they deem necessary to satisfy themselves regarding the condition of the property.
Some homes have had inspections completed before listing the property for sale and those inspections are provided to prospective buyers, but buyers still have the right to do their own inspections if they choose. A typical scenario in this area is for sellers to provide an inspection and disclose all the material facts and then ask a buyer for an offer that is as-is. Therefore, they are not looking to do any repairs or provide any credits to repair deficiencies of the property. Buyers always have a choice to write a contract with an inspection contingency in place and protect themselves from assuming too much risk in an as-is sale. Once they have all the information they need, then they have a full understanding of what as-is really means to their specific situation.
The standard time frame for an inspection contingency period is 17 days but it can be adjusted to any timeframe that is agreed to. The difference between a non-contingent offer and an as-is offer is simply whether the buyer puts their earnest money deposit in jeopardy while they are doing investigations or not.
Buying an as-is home is not just assuming all the risk, it is finding out all there is to know about the property then assuming the responsibility above what the price offered for the property is to do the repairs needed themselves and not ask the seller to repair them or credit them for those repairs. Writing a non-contingent offer, which is also as-is, is much more of a risk to the buyer and much more of a safeguard to a seller, and therefore more attractive as an offer. What this would mean is that the buyer is saying, “If I cancel this contract due to any findings during the investigation period, the seller can keep my earnest money deposit.”
Protection is provided in the standard contract to allow for buyers to understand what they are buying before their earnest money is in jeopardy. In California there is additional protection so that a maximum of 3% of the purchase price could be kept by a seller if the buyer defaulted on the sale once all the appropriate contingencies have been released. It is up to the buyers when they want to release the contingencies, and that contingency period is noted in the contract when submitted to the seller. Buyers and sellers, you can negotiate with each other through your agents to find mutual agreement, and buying and selling can be a smooth, win-win situation for both parties. It doesn’t have to be a stressful fight.
In real estate sales, negotiations are always a tactic to come to a mutual agreement. Make sure you choose your real estate agent wisely and vet their negotiation skills and knowledge of the process. It can make all the difference in buying and selling your home.
Kristina Mattson is a real estate broker licensed in both California and Nevada, and she manages multiple offices for Chase International. Kristina is a longtime resident who raised her three children on Lake Tahoe’s North Shore. In addition to being a real estate trailblazer, Kristina enjoys relaxing on her boat, letting loose at concerts, and taking care of her family.