Why would a home buyer waive contingencies on a house which has a lot of problems?

Question

I'm puzzled.  A relative of mine listed his home for sale "as is".  It was built in the early 50s and no repairs have ever been made on it.  It's been repaired esthetically (new paint, crown molding, ceiling fans) but none of the major problems have been addressed.  This home went on the market on 10/1/23 and has fallen out of escrow 3 times already as soon as pending buyers do their inspections.

The house should only be a tear down (termites which have destroyed the garage and interior of the home, no central air/heat throughout although it's listed as such, broken showers and dish washer, swimming pool with cracks in it, a leaky roof, etc..).  It's priced about 20% above market so it's just not selling.  However, it's now in escrow w/a pending buyer who waived all contingencies and is offering to pay a premium on this house.  He doesn't intend to do a tear down on it so I can't imagine why he wouldn't have an inspection.  Is it possible that the lender (bank), however, would insist upon an accurate appraisal and inspection of the home and diminish their loan amount, accordingly?

I must be missing something here because previous potential buyers realized these problems right away.  Any opinions or advice would be greatly appreciated!  (I have extended family members keeping their eyes on this problem, also.  The home seller isn't telling us anything)

Erik Estrada · Answer

This happens all the time especially in LA County. There just might not be enough inventory in the area that they are looking at specifically.

Matthew Paul · Answer

Why ?  Because humans make stupid decisions every day . Some people have more money than they have brains .  I think W.C. Fields  said  " A fool and his money are soon parted "

Angie Castro · Answer

There are so many reasons to why people would buy a house that are emotionally based and this might apply for this situation. I listed a property once that I swore would not get more than $170k because of the condition. Comparisons were selling for $185k. The house needed EVERYTHING and the sellers were selling it AS-IS and cash only. Someone offered $199k to get it off the market the day of listing because her mom owned the house across the street and she just wanted to be close to her. Financially it wasn't the best decision but emotionally it made sense!

Lynn McGeein · Answer

@Shane Alexander even if selling as-is, seller and listing agent are required to disclose any known material defects, at least in the states where I have purchased property.  If previous inspections found non-functioning heat, extensive termite damage, etc., then the buyer should be aware of that through disclosure. Some buyers who cancel agree to share the whole inspection report with seller so next buyer can choose to use it instead of getting their own. An original 50s house near me went for way more - $100,000+ over what we expected - then they did a major renovation on top of that.  Some people, not many, just want the area and don’t care if they’re way overpaying for the house.

Randall E Collins · Answer

As a wholesaler, I have found that most investors prefer a distressed home over a turnkey. I suppose it increases the value of the home. And/or the ARV.

Carlos Ptriawan · Answer

Depending on the demand of the area as well , also to repair the issue that mentioned above is not that problematic , if neighborhood value is 2 mil you sell 1.7 I would buy in above condition

Why would a home buyer waive contingencies on a house which has a lot of problems?

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