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REL: “As-Is” and Due Diligence

Real Estate Lingo: “As-Is” and Due Diligence

So you’ve found a house that looks like The One, but your Realtor informs you that this is an “as-is” purchase, so you should think carefully if it’s really for you. What does that mean?

The answer is: it’s complicated! And it depends on the seller. But it’s also not really that complicated.

Typically, when a seller indicates to the buyer (often in the listing description itself) that they are selling their property “as-is”, they’re indicating to any potential buyer that they do not intend on making any repairs to the property. The buyer is agreeing to purchase the home “as it is”, in the state in which they find it at the time of contract ratification. A buyer can also offer to purchase a home “as is”, in order to attempt to make their offer more appealing than a competitor’s. A buyer that indicates ahead of time that they won’t ask for repairs is enticing when compared to a buyer that may ask for repairs!

Example language from the 2016 CCRA contract for how to indicate an “as is” purchase.

Ask the seller for repairs? What’s that? The seller might have to fix things? In most instances here in South Carolina, the buyer will have a period of time after contract ratification called the due diligence period. During this time, the buyer has the contractual permission of the seller to conduct any and all inspections the buyer wishes to perform on the house, so long as they aren’t invasive or destructive. On the typical contract, this period is ten business days, though this amount can vary wildly depending on which contract you use to purchase your home. Always make sure to read the contract carefully, and ask your Realtor if you have any questions about anything. If they can’t answer it, they can direct you to an appropriate real estate attorney who can.

During this due diligence period, you have the option of asking the seller to fix issues that inspectors found during that period using a document called a repair addendum. This is an extra piece of the contract that says “the buyer will purchase this home, so long as these repairs are done to their satisfaction.” Of course, a seller doesn’t have to agree to do these repairs; at this point, it’s basically a second negotiation period. The seller may agree to do all, some, or none of the repairs; in response, the buyer can either choose to go forward with the purchase, or bow out.

picture of a home Disharoon Homes sold "as is" in 2018 to illustrate that selling a home "as is" does not necessarily indicate anything about the home's condition
A home we sold as-is in 2018. Notice it’s quite lovely! Sometimes sellers just don’t want to mess with doing repairs. Saying a home is “as-is” doesn’t mean anything about its condition; just that the seller would rather not do repairs.

A seller indicating their property is being sold “as is” is basically telling all buyers “I’m saying right now that I do not wish to do any repairs”, nothing more and nothing less. Now, the seller may change their mind, and it certainly doesn’t preclude any buyers from asking the seller to fix things… but we always caution our buyers: the seller has made their intentions clear. Go forward assuming that there will be no repairs.

Depending on the home, this may or may not be an issue! For some homes, there aren’t really any issues to speak of; the seller just doesn’t want to do the song and dance of a repair addendum. And, if there are issues with the home, buying a home as-is doesn’t have to be a problem! Maybe you have a cousin who’s really good at carpentry work. Maybe your best friend is a building contractor. Maybe you’re an investor, so you’re looking for something that needs work so you can fix it up and flip it for profit. Maybe you’re looking for a fun project to tackle on your weekends. As-is deals aren’t bad, they’re just not for everyone. The most important thing is to do your due diligence as a buyer, and to make sure everyone communicates honestly through the process.

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Samantha Disharoon

Samantha Disharoon is a listing specialist and broker manager at Disharoon Homes in Columbia, SC.

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