Sellers love them, buyers reluctantly accept them, but almost nobody seems to know what an AS IS sale means. So take the following quiz and see how much you know about AS IS sales.
AS IS – California real estate Myth or Fact?
- If I offer my home for sale AS IS, that means I don’t have to fix anything.
Myth. Even if the buyer writes AS IS on the contract or adds an AS IS addendum, unless he/she has also waived his/her buyer investigation contingency with the offer, he/she can ask for repairs and if the seller refuses, terminate the contract without penalty.
- If I want to sell my home AS IS, I still have to pay for Section 1 (existing) damage on the termite report.
Myth. The RPA, the most commonly used residential real estate contract in California, no longer references a termite report/termite report clearance as a condition of sale. Section 1 damage is now a completely negotiable item, as long as the buyer doesn’t reference it in their offer. Exception: FHA loans
- Lenders will not make loans on AS IS sales that have Section 1 damage on the termite report.
Myth (for conventional loans), Fact for FHA and VA loans. For conventional loans, the lender doesn’t even see any termite reports on the property. If you are choosing to accept an offer by an FHA or VA buyer, however, they will need a clear termite report to get their loan (but VA buyers can pay for repairs).
- If I sell my home AS IS, I don’t have to disclose anything.
Myth. AS IS has nothing to do with sellers disclosing material facts about their property.
- If I want to sell my home AS IS, I shouldn’t do any inspections, because they will reveal problems with my home.
Myth. If you want to successfully sell your home AS IS, doesn’t it make sense to let the buyers know what issues there are?
- If a buyer makes an AS IS offer on my home and I accept it, he/she can’t ask for any repairs.
Myth. Unless the buyer releases their investigation contingency, they can ask for repairs or credits ($$$), and if the seller refuses their request, they can cancel the contract without penalty.
- All real estate sales in California written on a RPA (residential purchase agreement) form are, by definition, AS IS sales.
Fact. The default contract in California IS for an AS IS purchase, with the buyer having time to inspect the property. Any request for repairs/credits is a new negotiation.
Please note, all the above is in reference to selling residential property in California. Each state has its own laws regarding real estate sales.
Learn anything from this quiz (or disagree with something on it)? Please send me a text (925-784-9463) or email me at [email protected]