If you are buying or selling an "as-is" reality listing during this peak home selling season, it is very important to understand the pros and cons of such a reality sale. Thousands of houses and condos are sold "as-is" every day.

But an "as-is" sale usually isn't the best way for a home seller to get top dollar. The reason is an "as-is" sale gives a warning signal to prospective buyers there might be something wrong with the property. However, an "as-is" home purchase might be an incredible bargain for the buyer who understands the possible benefits and detriments.

WHAT IS AN "AS-IS" HOME SALE? Most of us are familiar with "as-is" used car sales. It means the seller makes no warranties or representations as to the car's condition.

Although similar, "as-is" home sales are a bit different, thanks to state laws and court decisions.

The old days of "caveat emptor" (let the buyer beware) are long-gone in most residential sales. Today's rule seems to have become "Home seller, beware of the buyer's lawyer."

When a home is sold "as-is," that means the seller makes no warranties or representations, and will not pay for any repairs of even obvious defects. However, in most states "as-is" home sellers are now required to disclose to their buyers all known defects in the residence. The buyer can then consider these disclosed defects when making a purchase offer.

For home buyers, an "as-is" sale is a "red flag" warning to be especially careful. At a minimum, buyers of "as-is" houses and condos should make their purchase offers contingent on a satisfactory professional inspection by a reputable inspector.

Personally, I recommend members of the American Society of Home Inspectors (ASHI) because of their tough membership requirements. Local ASHI members can be located at www.ashi.com or 1-800-743-ASHI.

WHY SOME HOME SELLERS SELL "AS-IS." As experienced reality agents know, many homes are listed for sale "as-is" for a variety of reasons.

The three major reasons for selling "as-is" are 1) the seller doesn't have the funds to correct the disclosed defects and prefers to discount the sales price instead, 2) an older fixer-upper house is likely to be renovated to the buyer's standards, and 3) the seller doesn't want the inconvenience and hassle of making repairs.

Additional reasons for "as-is" home sales include the seller 1) didn't live in the house and is not familiar with its possible defects, 2) recently acquired the property by inheritance or purchase and just wants to make a quick profit, or 3) has owned the home many years and doesn't care about getting top dollar for the property.

THE UNSPOKEN REASON FOR SELLING "AS-IS." But there is another unspoken reason some home sellers sell "as-is." They think they can get away with selling a home, which has a hidden defect that the buyer or a professional inspector won't discover.

For example, a few months ago I received a letter from a nice couple who bought their first home with virtually every dollar they had. Shortly after moving in, the sewer backed up into the basement. Upon investigation, the buyers learned the sewer pipe to the street was badly broken and needed replacement. They spent about $4,750 for a new sewer line and basement cleanup.

After talking with their new neighbors, they learned the Roto-Rooter man was a frequent visitor to the house so the seller obviously knew of the problem. Unfortunately, for the buyers, the seller had moved out of the area and couldn't be easily sued for damages.

Unless there was evidence in the basement of previous sewer backups, even the world's greatest listing reality agent and professional home inspector probably never would have discovered this serious defect.

DON'T REJECT AN "AS-IS" HOME. Personally, I've bought many "as-is" residences for investment, which were incredible bargains. However, I always insisted on making my "as-is" purchase offers contingent upon approval of a professional inspector's report.

To illustrate, the best "as-is" bargain I ever purchased was a house that had been rejected by dozens of other prospective buyers. As I walked into the living room and saw the ugly crack in the fireplace brick, my first reaction was "yuck."

However, I made a very low purchase offer, contingent on the approval of a professional inspection, thinking my "low-ball" offer would be rejected. To my surprise, my offer was accepted.

Of course, I accompanied my professional inspector and asked him many questions about the fireplace, which he thoroughly inspected, even up in the attic. He reported it was just a superficial but very ugly crack, which could be repaired for about $150 with special fireplace mortar.

HOW TO HANDLE UNDISCLOSED HOME DEFECTS. Buyers of "as-is" homes should always 1) insist their sellers provide a written disclosure statement of all known defects, and 2) make their purchase offer contingent on the buyer's approval of a professional inspector's report. The buyer should always accompany the inspector to discuss any undisclosed defects, which are discovered.

If the inspection report reveals significant unexpected defects which, in fairness to the home seller, might have been hidden (such as attic roof leaks), the buyer then has two choices: 1) cancel the purchase and obtain an immediate refund of the good faith deposit, or 2) re-open negotiations to obtain a repair credit for the estimated cost of correcting the unexpected defect.

Many sellers are so anxious to sell their home, especially in a slow "buyer's market," they will gladly agree to buyer repair credits for the undisclosed defects, even if the seller was unaware of those problems.

CONCLUSION. For various reasons, many houses and condos are offered for sale "as-is." That means the seller must disclose all known defects but will not pay for any repairs.

Home buyers should not automatically reject "as-is" homes. However, they should 1) insist the sellers provide a written disclosure statement of known defects, and 2) make their purchase offer contingent upon a satisfactory report by a professional home inspector. More details on "as-is" home sales are available from a local real estate attorney.
posted by Rick at 4/15/2006 03:20:00 AM

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Friday, April 14, 2006 4/14/2006 07:51:00 PM

What Is a Home Inspector, and What Do They Do?

Home inspectors have a broad knowledge on many topics. A good house inspector is well versed in all fields of residential construction. A home inspector gives an overview of the condition of the reality property and reveals major defects visible.

The job of an inspector is to inspect the structure and major systems of the house and give a written report to the client describing the items checked and the defects observed. Inspectors do not enter or perform any procedure that may damage the property or its components or be dangerous to the home inspector or anyone else. Inspectors will not move personal property, debris, furniture, and carpeting or other materials to inspect an item. A home inspection is a visual inspection and equipment and systems are not dismantled.

An inspector examines and reports on the conditions adversely affecting the following systems of the home and attached garages or carports:

Roof
Roof materials, ventilation, attic, insulation, flashings, gutters, and downspouts, sofits and facias, skylights, and roof mounted equipment

Electrical
Exterior service and meter, main panel/sub panels/wiring, interior components, exterior components (receptacles, switches, light fixtures)

Heating and Fireplace
Type of fuel, equipment location, thermostat type, location & condition, warm air systems, hydronic systems, space heating, fireplace flue and chimney

Plumbing
Main supply lines and shut off, interior plumbing line materials, water pressure and drainage flow, fixtures and faucets, hot water source and privates waste systems

Exterior
Exterior siding materials, exterior trim, primary windows, exterior doors porches and/or decks, steps and/or rails, garages and/or carports, fire escapes, grading and drainage.

Materials of Construction
Foundation/basement or crawlspace, framing structure and materials, ventilation, interior drainage,

Air Conditioning
Equipment location, type, thermostat type, location and condition, ductwork, registers and grills, filters

Insulation
Type, thickness, r-value, percentage insulated.

Interior
Walls, ceilings, floors, cabinets and counter tops, interior doors and hardware, interior of windows, rails and stairs, kitchen appliances

A good home inspector can be found in your local listing, through your reality agent, recommended by family, or from your local housing authority.

posted by Rick at 4/14/2006 07:51:00 PM

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Thursday, April 13, 2006 4/13/2006 06:22:00 PM

Buying Reality For Resale??

If you are in the process of trying to locate some well maintain reality sites online to locate a home I would like to refer you to a site. This site has over 250,000 homes listed that have been seized and are being sold for a fraction of the actual costs. This reality site is called Seized Real Estate.

Ensure to take a browse through their site to find a home in your area. I should make a note here. This site is only for the U.S.

posted by Rick at 4/13/2006 06:22:00 PM

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Wednesday, April 12, 2006 4/12/2006 06:20:00 PM

Ten Things Home Buyers Should Avoid When Buying A Home

Below are 10 things which I feel should be adhered to when you have an accepted offer for a home.

1. Don't Make a Major Purchase
If you are depending on a mortgage to move in and cover that major purchase you best hold off until after the closing date. There are many terms which can be written into the purchase and sale agreements. This see to change quite often depending on the reality agency which you are using. If just one of these terms are not met then both the seller or buyer has the option to cancel the agreement. So you best wait until after the closing date before you make a major purchase.

2. Don't Change Jobs Unless It's Necessary
Your financial institution or lender like to see a consistant job history. It is best to stay where you are until after the house is yours. Changes in these circumstances can have a negative impact on obtaining the mortgage to purchase your home.

3. Don't Give an Earnest Money Deposit Directly to a Private Seller
If a deposit is being provided in a private sale ensure that terms are written and signed that they deposit received must be placed in a trust account until after the closing date. Most private sellers do not understand that a deposit is not theirs to spend until after the sale is complete.

The best option is to have an attorney palce the deposit into a trust account and terms drafted dictating what will happen with the deposit if the transaction is unsuccessful. It will save you from having to fight to get your deposit back from the seller.

4. Don't Let Your Emotions Take Over
Keep a cool head during the whole process. I will warn you now. The home inspection can be quite stressful when the inspector outlines thier finding. Be realistic. No home is perfect. Keep in mind it is not unusual for a home owner to take care of some repairs themselves prior to the closing. Don't let the seller's refusal to do a small repair kill the deal on a home you truly love.

On the other hand, don't fall so much in love with the house that you'll buy it no matter what needs to be done. Unless you're sure you can handle it emotionally and financially. Decide what type of repairs you can realistically tackle, then stick with the decision.

5. Don't Forget to Switch Utilities
That sounds simple, but you'd be surprised how many people forget to apply for utility service at their new home. Call the utility companies as soon as you have a contract. Find out how many days lead time they need to switch the service, then get back with them when you have a firm closing date. Don't forget to discontinue services at your old home.

6. Don't Forget Insurance
A no-brainer, right? But it's another often-forgotten task that buyers scramble to take care of at the last minute. Before closing, your lender will want to see an insurance binder showing you have coverage for the new home. Get it as early as possible so that closing isn't delayed. In some locations, additional types of insurance coverage might be necessary. Talk to your lender about insurance requirements well before the closing date.

7. Don't Become Best Friends with the Seller
It's great to be friendly, but don't get into too many long discussions with the sellers, because personality conflicts often cloud judgments. Remember, this is their home. You're no doubt excited about moving in, and if you didn't like the house you wouldn't have offered to buy it. But you'll make changes. Everyone does. A casual statement about "ripping up that ugly carpet" might be hurtful enough to keep the seller from negotiating with you about repairs or other issues that crop up.

8. Don't Panic if the Appraisal Comes in Low
At least not at first. There are some things you or your reality agent can do to correct the problem. Ensure to discuss this further with your reality agent.

9. Don't Go It Alone
If you're working with a reality agent, it's the reality agent's duty to track many of the day to day details that involve the lender, the seller, or the seller's agent. Be sure your agent schedules a final walkthrough the evening before the closing.

10. Don't Ignore Your Lender's Requirements
Know what is expected of you and take care of it. For instance, a Certificate of Eligibility is required to move forward on a VA loan. That's something you must handle yourself. Answer the lender's questions and provide required paperwork as quickly as possible. Moving into your new home depends on it.

posted by Rick at 4/12/2006 06:20:00 PM

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Tuesday, April 11, 2006 4/11/2006 10:29:00 PM

Purpose Of This Site

Recently my wife and I have decided to purcahse a new home. We spent years renting and have decided it is now time to ensure the kids had a home in which they could call their own as they grow up.

During our search for a new home we have dealt with many reality agencies such as remax reality, prudential reality, era reality, edina reality, gmac reality, coldwell banker reality. Let's just say the list goes on. We even took on the task ourselves and viewed private sales. This is how we found our new home. After working with so many reality agencies we have gained a firm understanding of reality law and what is required to complete a successful purchase.

Let me elaborate a bit here. As a result of taking on the tasks ourselves we estimate we have saved approximately $27,000 in total after the dust has settled. Allow me to provide some figures. First of all we managed to negotiate a lower asking price for the home with the current home owners. To be exact we managed to reduce the price by $13,000. We saved the 6% reality fee. We found an inspector to perform the home inspection at our local housing authority. The inspector alone saved us half of what everyone else quoted us for. We are very pleased with the results as well. The bank even stated the inspection report was one of the most detailed they have received. I must say he was very detailed during the inspection. We also managed to negotiate with the current home owners that they pay for additional items which are required by law to have complete prior to the closing date which is May 15th. Such things as they are responsible for the land migration to the new zoning which would have cost an additional $450. They are required to ensure that all leases and taxes on the home are paid up to the closing date. There are a few more that I can not think of right now that we have included in the terms of the sale as well that helped to reduce costs and place more money in our own pockets.

So as you can see we are quite happy with the results of purchasing our new home on our own.

The purpose of this site is to provide information to other potential home owners that will assist in reducing costs. Whether you decide to work with a reality agency or do it on your own. Soon I will be listing some sites and materials that helped us enormously to reduce costs. They will be located to the right.

To all of you who are looking to buy a home happy hunting.

posted by Rick at 4/11/2006 10:29:00 PM

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