When you’re looking through listings of homes for sale, some may be listed “as is.” This means that even if the home inspection reveals major defects or safety issues, the seller will not make repairs or alter the price to compensate.
What Does ‘As Is’ Mean?
The seller of a home usually is open to adjusting the sale price, making repairs, or paying for repairs if the home inspection reveals problems with the property that were unknown to the buyer when they made their offer.
When a home is listed for sale “as is,” the seller is communicating to buyers in advance that they are unwilling to make any repairs or changes to the home after accepting an offer. If a home inspection during the closing process reveals an as-is home needs repairs, the seller will reject any requests from the buyer to renegotiate the price or make repairs.
If you proceed and buy the home, you’ll need to pay for repairs yourself. It’s important to take steps before making an offer on an as-is home to ensure it’s the right decision for you.
This risk can work in your favor, as a home listed for sale as is may not necessarily be in poor shape. There are many reasons why homes are sold as is, and it’s possible to buy an as-is home for a discounted price that needs only cosmetic or minor fixes.
When it applies to the entire property
A seller can list the entire home or just certain parts of it as is.
If the entire property is listed as is, then the seller is unwilling to change anything about the home, and is under no obligation to disclose any problems they know of, except as required by law.
When it applies to specific aspects of the property
Some sellers list only certain parts of the property as is. Common examples include appliances, fireplaces, swimming pools, or fences. When a seller lists certain systems or components of the home as being sold as is, that suggests they have flaws or need repairs.
These types of as-is listings pose less of a risk to buyers because they often involve relatively minor problems or repairs that the seller doesn’t want to deal with.
3 Reasons Why Homes Are Offered As Is
Here are three different reasons why a home might be listed on the market as is.
1. It needs major repairs
If expensive repairs are needed, the seller may not want to pay for them when they are selling the home.
Some sellers might lack the resources to invest in the home before selling, so they list it as is to let buyers know that what you see is what you get. Whether it’s a leaky roof or a structural issue, those problems will be yours to deal with if you buy the home.
2. It needs minor repairs
Sometimes the damage is minor or relatively inexpensive to fix — it’s just that the seller doesn’t want to bother with it.
3. It needs to sell quickly
If the seller is starting a new job or is getting a divorce, they might need to sell the home quickly. Listing the home as is can help them streamline the negotiation process by communicating in advance that they’re unwilling to handle any fixes or negotiate making repairs.
Financing an As-Is Home
When you take out a mortgage, lenders order an appraisal to confirm that the loan amount is appropriate relative to the value of the home.
Even if you’re buying a fixer-upper, the property will need to be in livable condition and meet certain eligibility requirements. When deciding whether you should buy a house as is, you’ll want to know the exact requirements that the home must meet. Requirements will vary depending on the location, mortgage lender, and loan type.
Conforming conventional loans
Conventional loans are mortgages that aren’t insured by the government. However, to qualify for a conforming loan, the property must meet requirements set by Fannie Mae and Freddie Mac — two government-sponsored enterprises that buy loans from lenders.
Superficial damage from wear and tear won’t be disqualifying, but Fannie and Freddie do require that the loans they buy be for homes that are in safe, livable condition. If there are major structural issues or safety hazards, those will need to be addressed before you can get a conforming loan to buy it with.
FHA loans
Loans backed by the Federal Housing Administration have looser eligibility requirements than conventional loans as a way to help make homeownership more affordable for more people. However, as with conventional loans, the home needs to be in safe and livable condition for you to get an FHA loan.
To learn more about what could cause a property to be deemed ineligible for an FHA loan, you can consult the minimum property standards set by the Department of Housing and Urban Development.
VA loans
Veterans Affairs loans are offered to people currently serving in the military, veterans, and their surviving spouses. VA loans have slightly stricter requirements that can make it trickier to qualify for a loan on an as-is property. For example, the roof on the home needs to be in good condition, and the heating, mechanical, and sewage systems must be fully functional to get a VA loan.
USDA loans
U.S. Department of Agriculture loans are available to low- and moderate-income borrowers buying a home in certain rural areas. To be eligible, the home must have a sealed roof and functional heating, cooling, and electrical systems.
FAQ
Here are answers to some common questions about buying a home as is.
