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Buying a Home As-Is - Buying a Foreclosure or Bank Owned Property

Tips for Buying a Property in As-Is Condition

Last Updated: June 1, 2015

Since the housing bust of 2008, a lot of distressed homeowners let their homes go into foreclosure and ultimately back to the bank. Reports of thievery by homeowners taking out appliances, light fixtures, ceiling fans, cabinets and the like, out of the house before it goes into foreclosure have been widespread and an all too common occurrence. This forced the banks to list a lot of homes in an "as-is" condition; that is, in their existing state, with no promise of potential repairs. This is in contrast to a traditional sale, where owners are often required to provide seller disclosure statements, and any unsatisfactory results of buyer's inspections and investigations are often used to negotiate additional repairs or price adjustments.

The common misconception is that any home that is being sold "as-is" will be in shambles, but the truth is, there are some surprisingly decent deals available in this arena. Informed buyers, who do their research and understand what they are getting into, can pick up some pretty good bargains.

What Does As-Is Mean?

As mentioned previously, many people assume "as-is" means a home is in serious disrepair, but that's not necessarily true. Simply put, the seller is providing notification upfront that they will make no repairs to the property as a condition of sale. A house advertised as is may range from near-mint condition to a lemon, depending on each sellers unique situation.

Why Might a House Be Sold As-Is?

The most common reason in the current housing market is the home is a foreclosure, or a bank REO; that is, it has been repossessed by the lender and is Real Estate Owned. Foreclosures are almost always sold as-is, and due to the fact that the lender has never occupied the actual house, they are often not aware of the intricacies that may typically be required on a seller's disclosure. Relatives may sell properties they have inherited in "estate condition" because they are in a hurry to settle an estate and don't want to spend money on a house they have no financial or emotional interest in. Finally, a seller simply may not have the time, money or desire to deal with making repairs, and may be willing to take a significant cut in proceeds to avoid the extra effort.

Is a Foreclosure Always Listed As-Is?

Or is it possible to negotiate with the bank for repairs or improvements? As a buyer you can always try to negotiate, but conditions of the home foreclosures market are more likely to favor the lender, who will in most cases be able to sell the property as-is.

Conduct a Professional Home Inspection

As with any home purchase, but particularly important with an as-is home, you should conduct a thorough professional home inspection with a well respected home inspection company. Here are some basic tips and things to think about if you find yourself considering this type of home investment:

When a home is marketed as-is, it gives the home buyer the advantage. The words as-is have a negative connotation and signal fixer-upper to many buyers. Use this to your advantage when negotiating with the seller, and with the proper research and items discussed in this article (and a little luck) you could come out with an excellent deal.

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