Are ‘As Is’ Agreements Really As Is For New Home Buyers?


Today because of the increased number of foreclosures and short sales, many properties are being sold “as is.”

In the past, we frequently saw homes that were in a state of neglect sold “as is.”

What we have found is that the term can be misconstrued by buyers and sellers.

The Arizona Association of Realtors has a form titled “as is” addendum, which sets forth the conditions of the sale and purchase of this type of property.

The addendum is also commonly used on investment properties where the landlord has not lived on the property.

An “as is” property does not preclude the seller or real estate agent from making disclosures about known defects or conditions that could affect a buyer’s decision to purchase the property.

A buyer should be meticulous about a home inspection to assure they are fully apprised of the condition of the property.

An example of how the “as is” terms of sale have been misinterpreted in the past is as follows:

A buyer purchased an “as is” home and got the necessary inspections to provide a level of comfort.

The inspector noted that the roof should be maintained yearly and had just a few years of life left.

No roof leaks were noted by the inspector.

The seller in their disclosure statement made no mention of roof leaks either.

The home was purchased prior to the monsoon season and sure enough, the hard summer rains caused the roof to leak profusely.

Contractors who had worked on the home for the seller told the new buyer that the roof had leaked in the past.

So why didn’t the seller disclose the roof leaks?

The seller assumed (that word has gotten many in trouble) that since the buyer’s inspector noted the roof was in bad shape, the seller was absolved from disclosing the leaks because the home was being sold “as is.” Guess who bought the buyer a new roof?

The rule of thumb in any transaction is, if you have a doubt whether you should disclose something, disclose it.

In the above example, if the seller had disclosed the previous leaks, they would have been off the hook for a new roof.

“As is” home sales are becoming more common, however, it does not absolve a seller from full disclosure and heightens the responsibility of a buyer to do thorough inspections of the property. Watch out the next time you consider putting an offer on an “as is” property, you don’t want to end up stuck with a leaky roof and no one to patch it.

Ray Pugel is a designated broker with Coldwell Banker Bishop Realty. Contact him at (928) 474-2216.


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