What The Meaning of “As Is” Is
From time to time, I get a contract in the office where the property is being sold “as is.” Sellers rejoice when they accept an “as is” offer, because they feel secure knowing that the 18 year old roof and 15 year old furnace are not going to cost them during inspection. However, as Lee Corso is fond of saying, “Not so fast, my friend.” As simple a concept it seems to be, “as is” can be tricky. Experience suggests that, more often than not, “as is” buyers still make inspection request. Why do Buyers do it? What is the justification for it? How do we prepare our clients to handle the situation without losing their cool? Keep reading!
Why do “as is” buyers make inspection requests? Wouldn’t you know, it all begins with the inspection. Even though the buyer is buying the property “as is,” the buyer wants to make sure that the property is not a money pit. Fortunately, this is not the case with most properties. (Quite frankly, if the property is trashed, the buyer probably already knew it and is not bothered.) However, as always, the inspector will find defects in the property. The buyer begins to panic and is now concocting all sorts of narratives in her head about how the seller “hid” all of these “terrible defects” from her. She is now in full on freak out mode regarding her “as is” purchase.
Miraculously, the buyer somehow still wants to buy the property. However, in order to make up for the seller’s “deceptive” behavior, she wants the seller to make some repairs or maybe give a credit for the “hidden” “defects” that the inspector discovered. How does the buyer justify this? She threatens to walk. Most “as is” contracts allow the buyer to inspect the property. If they find something they don’t like, the buyer can terminate the contract, and get her earnest money back. She will use that as leverage by threatening to walk from the deal unless the seller addresses the defects she deems unacceptable. What is the seller to do? At this point the property has been off the market for almost 2 weeks, and other interested buyers have moved on. In some cases, the seller needs the proceeds from this transaction to buy their new home, and that purchase will fall through if this buyer walks away. If the seller was not prepared for this situation, he is extremely stressed!
The fact is that most sellers do not fully appreciate the nuance of “as is.” That is why it is critical to address this potential scenario with your seller as soon as an “as is” offer comes in. The seller will have a better understanding and can incorporate it into their negotiation strategy. The seller will not feel as “burned” when the buyer makes requests. We all know what happens when the parties start taking things personally, and it ain’t pretty! A prepared seller keeps a level head and is far more likely to make a good, rational decision. Good, rational decision making closes deals!
In the event the buyer in your next “as is” transaction makes inspection requests, there is no need to panic. You will have prepared your seller. He will keep his cool and is ready to evaluate the requests with his attorney. They will determine a good strategy to move the deal forward. The deal is going to close, and you are already working on the next one instead of talking a panicked seller off the ledge.
Have a good story about an “as is” contract? Post it in the comments! If you like my article, please share it!
As always, I welcome you to contact me at 773-632-8330 or email@example.com with any questions about the meaning of “as is.” I am honored by your referrals! See what my clients have to say about my responsive service and fantastic results right here.