Thursday, November 27, 2014

The Ups And Downs of Buying Houses “As Is”
The Ups And Downs of Buying Houses “As Is”
The Ups And Downs of Buying Houses “As Is”
Published on September 21, 2014 by Jennifer Brady in Dallas Private Money, Hard Money, Hard Money Lender

With the housing market finally on the rise from our recent recession years, some people are seeking ways to sell property quickly (before another market crash) for the most money possible.

Selling houses “as is” is very common online (with “sight unseen”) and should be a red flag, and when it’s not related to online sales it is still a huge risk. While it is considered a standard of buying and selling contracts, it still has problems. “As is” doesn’t always mean the state the property was in upon the first visit. Before setting on a deal, buyers and sellers can technically agree on what will be repaired or altered before a deal is made, making the final sale “as is” after some work has been done. However, this is not often the case, usually any repairs that may need to be done become the full responsibility of the buyer. Despite the commonality of “as is” contracts, some states still maintain standards of seller responsibility to perform certain maintenance actions before a contract if affirmed.

If a seller wants to sell as is it often means they want to sell quickly and be done with the property. This can be useful to buyers since the seller will often settle for a low price. This method of selling can prevent buyers from getting inspections and appraisals performed before the sale, but it can still be done to help determine the value of the property in the current state. The biggest concern is usually pests like termites. If possible, learn the warning signs and ask the seller when the last Wood Destroying Organism inspection had been performed and records of any repairs, maintenance, pests, and the like. A major warning: not all states require the seller to tell you anything about the property if they’re seeking to sell it as is, but most do require a form for sellers to fill out with as much information as possible about the property.

There are a few motives for someone to sell their property as is, including:

Short sale, foreclosure, or lack of funds to keep the house running (this can also mean they couldn’t afford much needed repairs).
Inheritance (if no one’s lived in the property recently, be wary).
Need to move for work, family, etc (this reasoning is less likely to lead to unforeseen problems with the property).

If you’ve purchased a property as is, try to get an inspector in as soon as possible before putting any more money into the property to avoid spending money on a property which may end up as a money pit. Even if you’ve bought a property that needs major repairs before it’s suitable for flipping you can sell it as is to another buyer and try to break even, or you can make a few cheap renovations to try to earn some money back. Regardless of condition of a property, someone will buy it (and hopefully for more than you did).

Never assume a seller will reimburse you for repairs or credit you at a later date based on what you did to the property. This goes against the “as is” selling point. It becomes your responsibility to understand the potential cost of repairing the property for resale at a higher value, so it’s better to overestimate the costs of repairs than to assume you can get a good deal at what he seller is asking because there’s a good chance they aren’t aware of some problem on the property. You can always negotiate to allow an inspection of the property if you’re wary and if they refuse, cut your losses and move on, sometimes a bargain is a trap.

If you choose to purchase a property as is, contact us for money quickly to purchase or repair a house for one lucky family. High risk can lead to high reward, just be aware of repair costs and the value of the property in the surrounding area.

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