Real Estate Investor · Lynchburg, VA · Member since 2012 · 13 posts · 4 votes
Hello!
We're trying to purchase our second rental property. It is two homes on one piece of land and sold "as-is", which we understood to mean the seller would make no repairs. It appeared to be in good condition but we still put an inspection contingency in the contract. The inspection came back with major issues, many things not up to code and repairs probably in the $15-$20K range to bring it up to code. Our offer was $125K so the numbers didn't work anymore. We wanted to negotiate a reduced sale price but our realtor insisted that with an "as-is" sale, you can't negotiate at all, our only options were to proceed at the original price or cancel our contract. Is this typical of "as-is" listings?
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
9y
I would recommend providing them with the inspection report and your new offer. Everything is negotiable, even as-is properties, especially with major unknown structural and mechanical issues. Many as-is sellers who truly want to sell will have to consider major issues. If you can't come to terms, you just move on. Good luck.
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
9y
I would recommend providing them with the inspection report and your new offer. Everything is negotiable, even as-is properties, especially with major unknown structural and mechanical issues. Many as-is sellers who truly want to sell will have to consider major issues. If you can't come to terms, you just move on. Good luck.
Find a new agent. Everything is negotiable. You may not be able to get the seller to address the repairs prior to closing but there should be nothing stopping you from at least trying for a price reduction or cash concession at closing.
Roanoke, VA · Member since 2014 · 404 posts · 203 votes
9y
Kimberly Weatherford I agree with the others- you can offer whatever you wish. Your realtor works for you, and should present your offer.
As a side note, many "as-is" sellers won't even accept a contract with an inspection contingency. It sort of defeats the purpose of offering it as-is if you give the buyer an escape clause if they don't want to take the property as-is.
Rental Property Investor · N. CA · Member since 2015 · 32 posts · 23 votes
9y
Agree with what has been said. Real life example: we recently sold my grandmothers home which required major work. Even though we were clear in the listing "As-is", our realtor made it very clear that there is no such thing as long as you have contingencies (i.e. specifically inspection contingencies), everything is negotiable. Went under contract with an investor for just a little less than asking price, inspections came back identifying all the issues (>$60k of work), investor request $20k reduction and we settled for a $10k reduction. If neither party agreed, contract would have ended with investor able to get their deposit back. You're realtor concerns me a little, they should know this and be looking out for your best interest and not their wallet. From the sound of it, it seems like they are pushing you to purchase an investment property that no longer fits your criteria for their commission. Not someone I would want on my team.
Real Estate Investor · Lynchburg, VA · Member since 2012 · 13 posts · 4 votes
9y
Thank you very much for your insight everyone! We'll talk more to our realtor and make sure she submits a revised offer in the future. I just wanted to be sure I understood correctly. I appreciate all the replies!
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Kimberly Weatherford Maybe you realtor misunderstood you. When I think about an "as-is" sale I think I'm not going to negotiate the current owner doing repairs. I get it, they might take 3 months and the owner wants out of the property today. But that doesn't mean you still pay the asking price after you find an inspection report that indicates you'll have to spend $20K to bring it up to code. Now you realtor *might* be correct in the saying that the sellers are firm and won't take a price reduction. Still, you make the offer, have it rejected...and THEN pass on the deal. You don't give up without at least making the offer and getting the revised offer and getting the "no". That's also not to say that the seller didn't accept the $125K offer knowing there were $20K worth of repairs and (in their mind) already accept a value-appropriate offer.
You're not wrong to modify you're offer. They're not wrong to reject your offer. The only "bad" thing to do here is to just give up. Get to the "no" :-)
Davis, CA · Member since 2016 · 595 posts · 344 votes
9y
As is means to most people that the seller thinks the property is worth asking in the condition it is in, and plans to make no repairs or improvements to sell it. Your offer had a contingency for inspection.. which at the offered price, the property failed...
So you would just change your original offer, or cancel it and make a new one. as is doesnt mean you have to pay asking. your realtor is being special...
Johnson City, TN · Member since 2014 · 586 posts · 705 votes
9y
When I say the property is "as is", I mean it. I will go along with their inspection contingency. They then have the option to continue with the deal or back out. I don't play this game.
Each seller is different. If the numbers no longer work and you are prepared to walk away, then there is nothing wrong with putting a "Conditional removal of Contingency" out there. They then have 4 options (Accept/Reject/Counter/Ignore). So if you are going to cancel anyway, then throw it out there on the way out the door.
Now if you really still want it even at that price, it's a risky game to play. Because you threw the ball back in their court. They can call someone else who had an offer in or just close the deal down. So I do not recommend using the inspection as a negotiating tool unless you are ready to walk.
Investor · Grosse Pointe Shores, MI · Member since 2017 · 160 posts · 74 votes
9y
@Kimberly Weatherford I've learned a lot from my dad over the years, but perhaps the best advice he has given me is to always be prepared to walk away from a bad deal.
And that applies to real estate agents who don't know what they're talking about. Everything is negotiable.
... We wanted to negotiate a reduced sale price but our realtor insisted that with an "as-is" sale, you can't negotiate at all, our only options were to proceed at the original price or cancel our contract. Is this typical of "as-is" listings?...
Properties being sold 'as is' can be problematic especially if the seller is somewhat cryptic or tight lipped about just exactly what the issues are with the property. Getting the inspection to estimate repairs is a way to go but you probably want to be more concrete and firm on what actual repair cost will be as much as feasibly possible.
You cannot and should not make an offer on a property (most certainly with an 'as is' property) without knowing with a fair amount of certainty what the ARV and total repair estimate are/will be; you may also factor in your target profit margin.
The way you are phrasing the question suggest some emotional attachment to the deal. If the seller is aware of what both the repair cost and ARV for a property is but want you to make an unreasonably high offer that makes the deal unprofitable for you - simply find another deal.
You often make money on most rentals when you buy (based on what market you are in).
Diamond Bar, CA · Member since 2016 · 11 posts · 0 votes
9y
HI, Just to share some personal experience as I bought my personal residence last year where the seller was selling the place "AS IS".
This was my first time buying a home. The condo needed repairs but nothing major. We gave our agent our offer and we would ask him if he thinks it will go through. Whether or not OUR offer would get accepted? Too high? Too low? Our agent replied, "What I think is irrelevant. What matters is what the seller thinks of the offer and each sale/purchase is unique. I will put in what ever offer your comfortable with." Our agent also said that "AS IS" only means seller is less willing to negotiate and may require a little more finesse.
In the end, our offer was put through $10k less than asking with inspection as contingency. Inspection came back with 25k worth of damages. We negotiated for half the repair costs, seller agreed and we bought the place.
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
9y
The agent gets the same commission in most cases with or without the credit for repairs. What I have seen is their commission calculated off your offered price pre-repair credits.
You can reduce your price, your agent may be saying they don't think it will work. If you want a lower price because otherwise you will walk ask-nothing to lose if you are prepared to walk.
As is can mean different things depending on the person.
Real Estate Agent · Danbury CT · Member since 2016 · 1 post · 0 votes
9y
As an RE agent; Each local real estate market is different and how the ‘As Is' provision is written into the real estate contract to purchase (or Purchase Offer) is a very important for buyers to understand.
“ ‘As Is’ denotes that the seller is selling, and the buyer is buying an item in whatever condition it presently exists, and that the buyer is accepting the item “with all faults”, whether or not immediately apparent. This is the classic buyer beware situation, where the careful buyer should take the time to examine the item before accepting it, or obtain expert advice.” ~~ Wikipedia
Basically buyer is purchasing the property “As Is,” in its present condition and with all defects apparent or not apparent.
Yes, you can negotiated with the sellers, but the provision does negate the buyers from making claims of them not knowing they are buying a property ‘As Is’. In other words, you can’t say “I didn’t know I was buying the property 'As Is'.
Insist on a home inspection clause. Just because the seller may not want to perform any repairs, does not mean that a you have to accept the property condition, and buyer is always be able to revoke the contract based on condition 'as is', or not.
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
I might be in the minority here, but I think renegotiating an "As is" sale during escrow can be a chicken s$%t move. That can be a blurry line, though. At one extreme, something is discovered during the inspection that is expensive but there is no way the buyer could've spotted before submitting their offer ... in that case, maybe ok I could see seller lowers the price or buyer walks. At the other extreme end, there are buyers that as a matter of practice always try to re-trade their deals during escrow ... these buyers know what is wrong with the property and still put in a high offer just to lock it up in escrow with no intention of closing at that price, then use the inspection findings (which they already knew about) to renegotiate the price. This is most definitely a chicken s$%t move and these buyers usually earn a bad reputation if they do this kind of thing regularly.
So, either way, it is a perfectly legal thing to do as far as I know, but if there is intent and pre-meditation to do it or if it is on something that is readily apparent and should've been caught prior to putting the offer in, then it is bad business practice IMO. Not saying that this is necessarily the case for the OP, just stating that there are times in certain context where I think a buyer needs to suck it up and close as promised instead of trying to re-trade a deal in escrow.
Real Estate Investor · Lynchburg, VA · Member since 2012 · 13 posts · 4 votes
9y
We were pretty early in this deal and definitely not attached. At $125K plus some minor repairs, it made sense to us. Many of the things the inspector discovered were things we couldn't see, like when the HVAC was installed they removed joists under the floorboards for vents but didn't reinforce anything so the floor was now unsupported, or that the electrical wire ran entirely under the house before the breaker box and needs a disconnect installed, or that the ductwork for the HVAC is disconnected under the house and needs to be repaired, there are wiring issues which are a fire hazard, etc. Our realtor told us we couldn't submit a revised offer because of the as-is listing. I thought we could submit it and they had the option to refuse us. I'm not sure if our realtor actually submitted a verbal offer with the seller or not but we walked away from the deal anyway. If we'll be at $150K after closing costs and repairs then we can get a property in better condition for the same price.
It has been interesting to hear all the different perspectives on what is meant by "as-is". This has been really helpful to us as newbie investors and definitely given us some things to consider on future deals.
I know this is an old post, but does anyone know how negotiating after inspection on a bankruptcy sale work? I would be negotiating with the bank, not the seller...Is it ever possible to get the bank to renegotiate...especially if the offer is over asking price?