“It is what it is.” That familiar phrase is often used as a throwaway line, but when it comes to buying and selling a home, “it is what it is” often becomes a key term of the sale. When a seller lists a home for sale “as-is,” the seller intends for the buyer to purchase the property in its current condition, without any requests for repairs, fixes, remediation, credits, or other accommodations.

An as-is home sale comes with several risks for the buyer, but offers many advantages for the seller, primarily the minimal effort and expense needed to effectively list, market, and sell the property.

Here is what home buyers and sellers alike need to know before considering an “as-is” transaction.

Buying Trouble

In an as-is sale, the buyer agrees to take the bad with the good, with no expectations or rights when it comes to deficiencies with the property. This means that they may be purchasing a home with significant defects that they would need to pay for on their own dime (unless they plan a tear-down). These major problems could include:

  • Structural problems
  • Leaking or faulty roof
  • Mold or mildew issues
  • Chinese drywall
  • Active termite infestation or damage
  • Non-functioning HVAC, plumbing, electrical, or septic systems
  • Asbestos or other toxic materials

“As-Is” Does Not Necessarily Mean Sight Unseen

While an as-is contract generally means that the seller won’t do anything to change or improve the condition of the property, it does not necessarily mean that a prospective buyer must purchase the property without fully investigating and inspecting that condition.

As is the case in most standard real estate purchase agreements, buyers and sellers in an as-is home sale can agree to make the contract contingent on the results of a professional home inspection. In such cases, a buyer can unilaterally terminate the contract within a specified period following the inspection.

Nuances To “As-Is” Listings

Some “as-is” listings are more nuanced or expansive than simply “take it or leave it.” For example, some sales may only identify specific aspects of the property that are being sold as-is, such as appliances, swimming pools and spas, sheds and garages, or fireplaces and chimneys. Other listings may include the term “as-is, where-is.” This designation is meant to address problems with the location of the property, such as flood risk, zoning issues, government takings, restrictive covenants, or geological defects.

Best Practices For “As-Is” Home Sales

Sellers who want an as-is sale should make that fact abundantly clear in both their listing and in the documents they sign with any prospective buyers. Purchasers need to fully understand the implications of buying a property as-is and ensure that they have the opportunity to inspect the property and conduct other due diligence before closing and that they retain the right to back out of the sale based on the findings of those efforts.

“As-is” home sales raise unique issues and concerns for buyers and sellers alike.   An experienced Chicago real estate agent can help buyers navigate these complexities. Please contact us to learn more about how we can help.