I just went into contract on my first SFR and the contract stipulates as is. No sweat. Now comes my inspection. I asked my agent if I can use any issues that come up in the inspection to renegotiate the price. She said no and explained that my only option would be to back out and lose my earnest money.
My understanding was that “as is” means that the seller will not make repairs, BUT it does leave the deal open to renegotiation if anything turns up in the inspection that wasn’t previously disclosed.
Perhaps I’ve misunderstood the renegotiation post inspection idea? Maybe it’s something that’s done but isn’t the planned prescribed way? Maybe it’s bad form or a bit of a dick move among owner occupant but it’s done commonly among investors?
Any help/advice/guidance would be highly appreciated. Thanks BP community!
It all depends on what the contract says. You should be able to read the contact you signed and answer this for yourself.
In most cases, there would be a deadline marking the end of your inspection or due diligence period. If this deadline has not passed, you should be entitled to receive a refund of your EMD if you cancel (which can sometimes be your leverage for negotiation repairs or concessions*).
*What the seller is willing or able to do in terms of repairs or concessions will be dictated by a lot of factors. For example, if they have 12 full priced cash offers behind yours, they they probably aren't going to budge. They'll just move on to the next buyer.
If your inspection period or due diligence deadline has passed, then your earnest money "goes hard" and becomes non-refundable, except for any other remaining contract contingencies (such as a financing or appraisal contingency).
Your agent is privy to your contract and we are not. Is there a reason you seem to believe they are lying to you?
Thanks for your reply @Jeff Copeland. I've read my contract as best I can but it's dense legalese with which I have no prior experience so no familiarity. I'm sure I'll get better and quicker at digesting contracts with practice.
Hey @Russell Brazil. I don't think she is lying. She works mostly with owner-occupants so my assumption was that she's unfamiliar or maybe she's assuming, as mentioned above, that there are other buyers in the wings who the seller will turn to. I suspect not, however, as the seller is pressed for cash and countered my initial offer at 8% below listing with 4% below.
To answer the begged question before it's asked, I worked with her because my girlfriend worked with her for her SFR that she initially bought and occupied herself for a few years. There's a fair shot that going forward, I'll work with a more investor focused agent.
Thanks again for your input Russel.
I've bought a few houses like this. 'As is' generally means 'As is'. Meaning you don't go back to them for anything.
This is just based on my experience, but I'd bet it's typical........
Why would the seller bother losing possible buyers by putting “as-is” if they are really willing to pay for repairs anyway? The most logical answer is they aren’t going to be willing ti pay for any repairs. But, there’s also a small possibility that’s to cover their butt when you discover a larger problem after you own it that they “didn’t know about”.
You can always ask to negotiate, if they do then they just weren’t thinking when they put as-is in the listing. As long as you’re sure the problems are big enough to risk losing the deal fi you go past your inspection period go for it. Maybe it’s an iffy deal that need a couple more dollars off.
If the contract states as-is, then attempting to re-trade after inspection is generally considered in bad faith because you entered into an as-is agreement. However if you have an inspection objection contingency, then technically you do have the option to renegotiate. The seller is unlikely to agree to anything considering they have the understanding that the property is being conveyed as-is, and it might just piss them off, but you never know. I would only recommend it in certain circumstances such as when a material fact is uncovered during inspection that wasn't disclosed or factored into the price (it should be a good reason that perhaps neither party knew about).
This is why when I list a property as-is, I try to accept offers that waive inspection, and when writing offers I waive inspection (or at least waive inspection objection but not termination) so the seller knows I'm serious about my as-is offer and won't jerk them around.
@Ryan Brown As Is simply means the seller is not agreeing Up Front to make any repairs for fha/financing loan requirements. As Is contracts are renegotiated Every Day. Assuming you have an inspection period, during it you can certainly ask for repairs or a price reduction.....”As Is” has nothing to do with this.
Thanks @Wayne Brooks. That was my basic understanding going in.
Thanks @Cory Lucas. I’m not anticipating anything. I’m just thinking ahead.
@Ryan Brown, I don't know what market this was in, but in my state you can absolutely do what you suggested. This has happened to me and client's I have represented many times. As-is means seller will make no repairs, that's the meaning of as-is. However, if you do inspections and find something costly you didn't know about then you absolutely renegotiate if you are still interested in the property. And you don't lose your earnest money unless you have surpassed your inspection period and then pull out for issues unrelated in lending/appraisal. It doesn't sound like your agent is working in your best interest. But then again I don't know what market you are referring to and your contract law. If you ever decide to invest in Oklahoma, reach out to me!
Hey @Danielle Daly. This was in Tulsa. I think my agent and I may have just miscommunicated. Time will tell. At any rate, I since offered my initial accepted offer less the high end of estimated repair costs and seller declined. Thanks for your insight!
@Ryan Brown, investing is what I do day in and day out so if you decide this current agent isn't working out reach out to me. Best of luck to you!
In the future, you might want to assume that "As-Is' means 'As-Is'. Real Estate is getting to be different as they're changing the rules as they go along.
Let's say I was selling you a '52 Chevy.....advertised "As-Is'. You pay me and drive it away and 2 months later the engine craps out. Are you going to come back to me and ask for your money back? Don't think so.....
@Ryan Brown if you aren’t 100% confident in your agent’s response, spend a few bucks and ask a real estate attorney to review it and explain it. They are the only ones who can give you legal advice.
Thanks @Ryan Kelly
"As is" means precisely nothing in terms of obligation of the buyer; it is usually an attempt to signal the seller will not make changes, do repairs etc, but when faced with someone walking away from a purchase, they still have the choice to change their mind and do so. I think Steve K. nailed it with the comments on inspection:
"I would only recommend it in certain circumstances such as when a material fact is uncovered during inspection that wasn't disclosed or factored into the price (it should be a good reason that perhaps neither party knew about)."
Lets say you do an inspection and discover there is a huge amount of active knob and tube that you didn't know about. Maybe seller didn't know either. Well, you don't want it anymore. You notify the seller you don't want it as is because of this discovery, but you would proceed anyway if they take X off the price or fix it. They refuse to fix it but offer a partial credit. You decide if you want it under these terms.
All this is fine. Usual even. Not sure you would want to do a lot of business with someone who routinely makes offers on "as is" properties at one price and is always planning to renegotiate to another price.
Gotcha. Thanks @Jonathan R McLaughlin
I like @Jonathan R McLaughlin 's explanation. it would have to be something big and undisclosed, and you typically walk away from that, sometimes the seller will accept (negotiate) but it is a harder approach. Instead be more thorough when you first walk the property, possibly bring your contractor and make a lower first offer X, because we found (undisclosed) damage Y.
Thanks @Maurice D.. That’s my general lesson from this first contract. I leapt too quickly. There’s so much talk about moving fast and making an offer ASAP. I got things a bit out of order. It was a great learning experience.
That’s a pretty poor analogy. You bought the car and drove away. He is still in DD.