WHAT IT MEANS TO BUY A Home Sold In "As Is" Condition

WHAT IT MEANS TO BUY A Home Sold In "As Is" Condition

Buying A House As-Is: What To Know

Here is Orange County, You probably have seen a lot of homes being sold in “as-is” condition. As many home owners want to list their homes but don’t want to do any repairs before closing. This means there are no guarantees that everything is in working condition, but it doesn’t mean that the home comes with issues either.

Per the Residential Purchase Agreement, homes sold in as-is” condition subject to buyer’s investigation rights. So BUYERS, you have options. You can accept the home, negotiate repairs or credits, or cancel the contract. 

What Does ‘Sold As-Is’ Mean?

Sellers list their homes for sale as-is when they don’t want to do any repairs before closing. It means there are no guarantees from the seller that everything’s in working condition, and they’re not required to provide a Seller’s Disclosure. If you buy an “as-is” home and later find major problems, you’re responsible for the repairs.

“As-is” sellers still need to meet federal and state minimum disclosure standards, which include telling you about conditions like lead paint.

“As-is” doesn’t always mean broken beyond repair. There are many reasons why a seller might list a home as-is even with minor or no issues. The seller may be in debt and not have the money to pay for home renovations. The seller might not have time to wait for contractors to finish a major job. There are also plenty of non-repair-related reasons why a seller might list a home as-is.

Buying a home as-is might be more tempting when the market is competitive. If you are interested to begin your home search, let’s connect and let us guide you understand what buying an “as-is” home means for you and get you started on your home buying process.

What To Consider With An ‘As-Is’ Home Sale

Before you decide to close on that “as-is” home, consider the following points.


Minimum Property Requirements

Though “as-is” homes aren’t always in disrepair, most homes that are unlivable sell as-is. This can mean a bargain for contractors who can correct these problems. But while you might be up for the challenge of repairing a caved-in roof or a broken heating system, your lender might not be.


Most loan types require that the property meets certain livability standards, known as minimum property requirements (MPRs). A licensed appraiser will perform a home appraisal to assess the property and make sure it meets the required MPRs. Let’s look at the MPRs for the most common loan types.


FHA Loans

FHA loans are affordable government-backed loans provided by the Federal Housing Administration. To qualify, the home you buy needs to meet minimum property standards for FHA loans. The home needs to be safe for you and your family to occupy at the time of purchase, and it needs to be structurally sound.

In other words, it must not have any physical deficiencies or conditions that compromise its structural integrity. Most homes that need total renovations won’t qualify for an FHA loan.

USDA Loans

United States Department of Agriculture (USDA) loans* are for homes in eligible rural areas(though many suburbs qualify as rural according to the USDA’s definition). Here are a few of the minimum property requirements for USDA loans:

  • A structurally sound foundation
  • A roof that prevents moisture from entering the home
  • An up-to-date electrical system
  • Well-functioning heating and cooling systems
  • Suitable plumbing and water pressure


VA Loans

VA loans are a benefit of service for veterans and active-duty military members courtesy of the Department of Veterans Affairs (VA). Because VA loans are government-backed, their minimum property requirements (MPRs) are stricter than other loan types. Here are some general MPRs for VA home loans:

  • Clean drinking water
  • A working water heater and sewage system
  • A heating system capable of warming the home to 50 degrees
  • All mechanical systems must be in working order
  • The roof must be in good condition
  • The home must be free of pests


Conventional Loans

A conventional mortgage is one that’s not guaranteed or insured by the federal government. Most conventional loans are also conforming loans, which means they meet the criteria set by Fannie Mae and Freddie Mac – two government-sponsored enterprises that purchase mortgages from lenders and sell them to investors.

Fannie Mae and Freddie Mac allow properties to be purchased “as-is” when there are only minor deficiencies or deferred maintenance. The home must be safe and sound, and structural issues must be minor and due to normal wear and tear.

The Bottom Line: Is Buying A House ‘As-Is’ Right For You?

Sellers list their homes for sale “as-is” when they don’t want to do any repairs before closing. “As-is” properties may seem like a bargain, but the truth is that most contain hidden issues that can cost new owners thousands in repairs.

If you think an “as-is” home might be right for you, knowledge is power. Take plenty of time to schedule expert inspections and understand the real condition of the home before you decide to buy. If you’re ready to take a step toward buying an “as-is” home, call me now and get approved with today.

 

SOURCES: https://www.rocketmortgage.com/learn/sold-as-is; https://www.atlanticbay.com/knowledge-center/mortgage-closing-costs-5-types-you-need-to-know/; https://www.nerdwallet.com/article/mortgages/closing-costs-mortgage-fees-explained


Registration will begin April 3rd. All potential buyers will need to submit some documents, along with a CalHFA pre-approval letter from a lender as part of CalHFA's registration requirements.

Registration will close on April 29th. Shortly after, they will begin issuing vouchers in a lottery style to the winners. Each voucher lasts for 90 days so buyers who receive one will need to move quickly on their purchases.

LET US GUIDE YOU HOME

If you're looking for a team of positive, helpful partners who is ready to provide you with exceptional service, let's talk today! We're a top-rated team, with a wealth of knowledge in the area. Fill out your information below and one of our team members will get back to you.

FOLLOW US ON INSTAGRAM