In a nutshell:
A property marketed in “as-is” condition means that the seller is unwilling to do any repairs or offer any credits for any known or unknown defects in the house. Most as-is sales are also cash only and do not allow financing as any repairs required by the lender would not be covered by the seller.
Though it seems counter-intuitive, this can actually be good for both the buyer and the seller.
The seller benefits by curbing negotiations regarding the condition of the property; by being up front about the condition and terms, the seller helps to ensure there are no deadlocked negotiations regarding repairs or credits which could derail the deal once in contract.
The buyer can benefit as any known defects are generally accounted for in the list price, offering a transparent starting point for the rest of the transaction. Additionally, the hesitance you may have felt when reading "as-is" was also felt by myriad other buyers who may opt out of a well-priced property at the sight of those two words, lowering interest and increasing your chances of an accepted offer.
What to know:
- Most as-is sales are cash only. As-is sales can inhibit financing options, especially with distressed properties. Since the seller is unwilling to make any repairs or offer credits, it may not be possible to bring the property into financeable condition.
- Even with an “as-is” property, you can still request repairs or credits during escrow; Some sellers will acquiesce to these demands in order to salvage the sale, but most will likely still refuse.
- It is becoming more common for disclosures and reports to be made available during marketing(traditionally they have only been disseminated upon offer submission/acceptance) which allows you to get a preliminary idea of the condition of the property(including any known defects) and help you decide if you are comfortable generating an offer on an “as-is” property.