We have been getting some great questions lately from our clients and we’re going to answer one of them today. This one is about “as-is” real estate contracts and bank-owned homes. Here is the question:
“Many buyers are looking to purchase a bank-owned home and see the words ‘as-is’ in the contract. What does ‘as-is’ mean to a bank vs. a buyer? A buyer might think that the home has to be in a livable condition regardless of whether the contract says ‘as-is.’ What are your thoughts?”
When bank-owned properties are put on the market, the bank is making no representation as to the condition of the home. They have never lived in it, so they simply have no way of knowing. As a buyer, it is your responsibility to do any and all inspections necessary to determine the home’s condition. Per the contract, the bank is not obligated to make any repairs. Some homes might be in such poor condition that obtaining a loan will be impossible, or the cost of the needed repairs and updates might not make sense given the price of the home—this is when the help of an experienced Buyer’s Agent is invaluable in determining whether it makes sense to place an offer in the first place, and how much to offer.
When you enter into a contract, you want to be 100% comfortable with having to assume the cost of any repairs or updates that the home is going to need. If something major is uncovered in an inspection, it might be possible to negotiate a repair or a credit depending on the strength of your agent, and the policy of that particular bank, and the inclination of that asset manager. However, you shouldn’t assume that will always be possible. The bank is simply under no obligation to make fixes.
If you have any questions for us, don’t hesitate to give us a call or send us an email. We would love to hear from you.