Does “As Is” Mean I Can’t Have A Home Inspection?
Most foreclosures and short sales are sold “as is”. Many homebuyers are confused as to what this means for them. I am often asked whether this means that they won’t be allowed to have the home inspected.
You will be able to have a home inspection but it will be for informational purposes only. This means that the seller will not perform any repairs if something shows up in the inspection. However it is important for you to have the home inspected anyway so that you will know what problems you might have to deal with. Also, I like to write into the offer that the contract will be contingent on a satisfactory home inspection. That way if something is found that the buyers are not prepared to accept, they will have the opportunity to declare the contract null and void without penalty and their earnest money deposit will be returned. Some banks have similar terms written into their addenda.
In addition the home inspector may find something that needs to be repaired that the lender such as FHA will not accept. In this case the loan will not be approved unless the repair is performed by the seller before closing. Sometimes the bank will agree to perform the repair, but other times they won’t and the contract will fall through. Homes that will obviously need a lot of work are good candidates for FHA 203K loans, in which the cost of the repairs is rolled into the mortgage up to a specified amount.
When you are considering the purchase of a distressed property, a home inspection is especially important. Remember the owners of these properties have been struggling for sometime to be able to hang on to their homes. It was all that they could do to make the mortgage payments, and their was no extra money for repairs. Routine maintenance has been deferred. Even the rare foreclosure that appears to be in move in condition may have unseen issues.
There are some great deals on short sales and foreclosures in our area, email me if you would like a list of distressed property listings in any of the central Virginia areas.
Copyright 2012 by Pam Dent, all rights reserved “Does “As Is” Mean I Can’t Have A Home Inspection?“