What Does “As-Is” Really Mean?
What does “As-Is” really mean?
What does “As-Is” really mean? In this Seller’s Market, we are seeing more and more “As-Is” offers but buyers and sellers don’t always realize the definition of this term. Both may be surprised! Let’s take a look and this and break it down.
When a buyer chooses to make an offer “As-Is” or the seller wants to sell his home “As-Is,” in Indiana, we use the As-Is addendum in addition to the Purchase Agreement.
It’s a one page contract crafted by the Indiana Association of Realtors that lets all parties know the meaning of As-Is and what to expect. The main problem is that not everyone takes the time to read the terms and not all agents explain to their clients what it really means.
In the verbiage of this specific addendum, the definition and terms are spelled out. This is a quick overview to familiarize yourself with it. You should always completely read anything you are signing and seek legal counsel as you deem needed.
Point 1: States that the addendum is in addition to the Purchase Agreement terms. If they conflict, the addendum prevails.
Point 2: The addendum is specifically stating that the seller makes no warranty or representation of any kind about the condition of the property. Everyone agrees the property is sold as it is. It further states that the seller will maintain the property and it will be delivered to the buyer in the same or better condition on the closing date as it was when all parties entered the agreement to buy/sell.
Point 3: Defining the terms/conditions of the As-Is Addedum:
- The buyer has the right to have any/all independent inspections of the property after the acceptance of the offer.
- IF the inspections reveal any previously undisclosed defects, the buyer has the number of days written in the blank to either:
- Terminate the agreement and receive their earnest money back in full, promptly or
- accept any/all defects revealed in the inspections and continue with the purchase of the property.
- The addendum expressly states, the seller has NO OBLIGATION whatsoever to correct any defects found by the buyer’s inspections.
- If the buyer does not terminate the agreement to purchase in writing, within the number of days in the blank, all parties are obligated to continue the contract to purchase and close the transaction.
Point 4: Seller and Buyer both acknowledge and agree to the terms.
The As-Is does state that the seller is under no obligation, whatsoever to repair/correct any undisclosed defects found. That is plain and simple.
By the way, “undisclosed defects” means defects found that the seller has not already disclosed to all on the Indiana State Residential Real Estate Seller’s Disclosure form. This form is required from all sellers with the only exceptions being Estate and Bank (foreclosure/bankruptcy) owned properties.
However, a buyer can still ask. They just need to understand that the seller can say no. The buyer, then, has to decide if they want to move forward with the purchase or terminate.
Again, in today’s Seller’s Market, we are seeing a lot more “As-Is” transactions. Buyer’s are using them to make their offers more attractive to sellers. Seller’s are using them so everyone knows up front that they are unwilling/unable to make repairs to the property they are offering for sale.
Using the As-Is is always an option but one you should fully understand the definition of before using.
The Real Estate Pros team members are not and do not pretend to be licensed attorneys-at-law. As licensed Realtors, we assist buyers and seller with their purchases and sales using contracts prepared by the Indiana Association of Realtors and their attorneys.
Buyers and sellers are always advised to seek legal counsel about the laws concerning real estate.