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I am under a lot of pressure from my parents to insert an as-is clause into my buy-sell when I go to do the deal on the house.
Everything I'm reading has basically stated the only thing the as-is clause does is say to the buyer you don't intend to fix anything that might come up in the inspection. However the buyer can still do inspections and can still ask to have something fixed. The buyer or seller can still walk away at that point if they can't reach an agreement. So I'm not sure exactly what this clause even accomplishes in the first place.
My parents want me to insert the clause to protect me post sale. From two possible situations. A defect I didn't disclose because I was unaware of it. Or a situation where something like a water heater or furnace quits three weeks after they move in and they come to me asking for repairs.
Is this clause really worth inserting and if so why?
Just my opinion...First, you can't disclose a defect if you are unaware of it and, if you are unaware, the buyer would not be able to prove that you didn't disclose a known defect so I think your parents are well-meaning but overly-cautious on this point. In Florida, the difference between As Is and a "normal" contract is that an As Is contract has no contractual obligation on the part of the seller to fix a warranty item that is found to be defective as a result of the inspection process. So, for example, if the inspection were to turn up a defective water heater, under a "normal" contract, the seller would be contractually obligated to fix the water heater up at a cost not to excede a repair limit defined by the contract. Under an As Is contract, the seller has no obligation to fix the item but may elect to do so IF the buyer asks. For some buyers, "As Is" is a red flag. For others, not so much.
Regarding the possibility that there could be a post-closing failure, a home warranty that you provide could possibly make the "As Is" concerns more palatable but, in either case, it would be very difficult for a buyer to sue and win so it is is not likely to be an issue, as long as you are honest and forthcoming in your disclosures.
So, for example, if the inspection were to turn up a defective water heater, under a "normal" contract, the seller would be contractually obligated to fix the water heater up at a cost not to excede a repair limit defined by the contract.
I appreciate the replies so far and the explanations. I do have a question about this.
Is the above stating that under a normal sales contract if something comes up in the inspection I am *required* to fix it at that point - no matter what? I can't back out of the sale at that point if I don't want to fix whatever this item might be? Does that also remove the right of the buyer to forgo having that defect fixed and go forward with the sale anyway?
Get a copy of your Board of Realtor's contract...city or state or whatever is typically used in your area and check it out.
FYI, not fixing some items can preclude some forms of financing that want certain conditions working/looking good/etc. in their homes. (Think of it as the banks/lender's home and how they look at it, rather than the sellers here)
I appreciate the replies so far and the explanations. I do have a question about this.
Is the above stating that under a normal sales contract if something comes up in the inspection I am *required* to fix it at that point - no matter what? I can't back out of the sale at that point if I don't want to fix whatever this item might be? Does that also remove the right of the buyer to forgo having that defect fixed and go forward with the sale anyway?
Am I reading to much into this? Thanks
It depends on the language in your "normal" contract. In ours, the buyer and seller negotiate a repair dollar limit at the time of the original negotiation, and the types of repairs considered to be warrantable (rather than cosmetic) are generally defined. If the cost to repair falls below the limit, the seller gets it done. If it exceeds the limit, there are further options written into the contract language.
Look at it this way, if there are problems found in the inspection of a "normal" contract property, even if they didn't want to make the repairs, the seller would still have to disclose the now known defects to the next prospective buyer and those will probably result in a lower price, if there is another contract later. It's probably best to negotiate a decent deal and keep the buyer by *reasonably* getting the deal done, whatever it takes.
You could probably accomplish the same thing as an "As Is" listing, by inserting "Firm Price." The question is, 'Is either condition what you intend?' Recognize that "As Is" infers obvious problems that you do not intend to rectify, while "Firm Price" suggests a non-negotiable listing. Part of the fallacy with these 'disqualifiers,' is the misperception that the intent of a listing is to 'sell' the property, instead of 'attract potential buyers'. (People often make the same mistake with resumes, thus eliminating themselves from consideration before they even get an interview).
Your best bet is to make your listing as attractive as possible by eliminating any obstacles that might keep you from attracting potential lookers/buyers. A serious buyer can always 'ask you to fix something' or 'sell for less' (whether you have the 'clause' or not) ... and you can always accept or decline either. But, if you drive them away before/without looking, you have unnecessarily eliminated their opportunity to consider your property ... and your potential opportunity to consider their offer.
Unless your State specifically has something defining "AS IS", it means nothing but whatever you want it to mean in the contract. Understand that what you may want it to mean, may not be what a buyer takes it to mean.
My personal opinion is when I see "As Is", I take it to mean the seller knows of things wrong with the property and is too cheap or does not have any money to fix them. There are way to many properties for sale without an "As Is" condition, so to me, it's not even worth looking at unless the asking price is really low.
Selling a property as is does not eliminate your need to disclose that you have a problem with your sewer line. If you sell it as is and they have the house back up and flood sewage through out 8 months later then they can try to come after you.
Best bet is to disclose everything you know of and wait to get an offer, if the offer is acceptable then you can see what repair limits they are asking for in the contract if the contract has a spot for repair limits. Why eliminate potential buyers that may want $200 in repairs done? Your sewer may be an issue but if you disclose they can make their offer with the sewer problems in mind.
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