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Doozy or a Dud? Buying a House 'As-Is'
Things to Know About Buying a House in 'As-Is' ConditionÂ
For most people, a house is the most valuable personal asset they will ever own. Putting the funds together to buy a house is no small feat for the average person or family. This is one reason why some people consider the option of buying a house 'as is'.
Buying a house 'as is' essentially means that the person selling the house absolves themselves of responsibility for any faults or irregularities that should arise after the sale has been finalized.
Why 'As Is'
Sellers list their homes for sale 'as is' for a reason. The reason is that houses usually need repairs and the seller doesn't want to spend the money to do them. It may also be that the home has been listed for foreclosure and the seller doesn't have the means or the time to carry out repairs.
Know What You're Getting
It is, therefore, important that you understand what you are in for when you decide to buy a house in its present condition. Once you sign the paperwork, you cannot compel the seller to carry out the repairs even if you find that the house is in really bad condition or even inhabitable.
There are pros and cons of buying a house 'as is'.
Pros
- The price of such a house is usually significantly lower than one would pay for a similar house in the same vicinity that is in very good condition. The price is also usually low because the owner is trying to sell before their lender can repossess the house.
- The repairs needed may be many or major but you can put the money you save when you pay the low price for the house towards the most important ones. You can do the rest later bit by bit. You can also do some repairs yourself if you are adept with a nail and hammer.
- You can buy the house at a low price, repair it and sell it for a tidy profit. A lot of real estate investors started off this way.
Cons
- The house may be in worse condition that is discovered through the initial home inspection. You may later find that there are more serious problems like structural problems that comprise the integrity of the whole house.
- If you are buying a house 'as is' with the intention of repairing and then selling it, you may make much less than anticipated when it turns out that the house needs more work than initially indicated.
Can You Take It?
When it comes to investments, the guiding factor should be your risk tolerance level; you should never invest more than you can afford to lose. The same applies to houses being sold 'as is'. Only buy it if you can afford to take the risk that it may cost you more than initially indicated to fix the house so you can live in it or sell it profitably.
Mitigate the risk by having the home inspection done by a credible and professional home inspection agency. Contact our team of real estate agents when you're ready to start your home search process.
