What is an “as is” real estate contract?
Learn more about what the term “as is” means in real estate contracts, as well as the benefits and drawbacks of purchasing a property on those terms.
If you’re in the market for a new home, you may have come across the term “as is” in a real estate listing. There are both benefits and drawbacks of purchasing a property “as is,” so it’s important to understand this type of contract and what it means before getting the new keys.
What does “as is” mean?
The legal term “as is” in a written contract means that the buyer must be willing to accept the home in its current condition. If you’re the buyer, this means that you forgo the opportunity to ask the seller to make any repairs or reduce the price based on problems the property may have.
Entire property vs. components of the property.
You may encounter the term “as is” in two common circumstances.
If a property is listed “as is,” this means that the seller will not make any repairs or give any price reduction for problems of the entire property, which includes both the home and the grounds. Some common issues covered by an “as is” description could include leaks, mold or mildew, or major structural problems, to name just a few.
In other cases, a seller may choose to sell their property with one or more “as is” components. This does not guarantee the functionality of the rest of the property, but it does clearly identify certain elements the seller has declared they will not fix. Examples of this scenario might be a broken pool or a fireplace not to code.
Buying real estate is already a big decision. If you’re contemplating entering into a real estate contract for a property that is being sold “as is,” extra consideration is warranted. Does the “as is” condition come with a significantly lower price tag? Is the lower price sufficient to compensate for the deficiencies that have been identified? If a property is sold with “as is” components, are you justified in feeling more comfortable since the term only applies to certain aspects of the property?