AS IS clause but I still want an inspection

Buying & Selling Real Estate
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AS IS clause but I still want an inspection

Daniel KentPro Member
Rental Property Investor · Berlin, NJ · Member since 2016 · 83 posts · 23 votes

Hi All,

So I put an offer on a single family home that I am planning on rehabbing and renting out.  The sellers stated that they are unwilling to negotiate anymore on the price and will not make any repairs that we may request, essentially selling it as-is.  We understand that the sellers want to sell the house as-is, do not want to make repairs, and do not want to negotiate on the sale price.  Do we as buyers still have the right to do a home inspection and walk away from the deal if something significant comes up during the home inspection?  Or does the "as-is" prevent us to walk away, no matter what the findings of the home inspection discovers?

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y

Yes, if your contract allows for it. You can make it clear - in writing - that you want to inspect so you can start planning for improvements immediately after closing. I've done this before and it's never been a problem. Put it in writing and be very clear that you won't attempt to renegotiate the price or ask for repairs.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    Yes, if your contract allows for it. You can make it clear - in writing - that you want to inspect so you can start planning for improvements immediately after closing. I've done this before and it's never been a problem. Put it in writing and be very clear that you won't attempt to renegotiate the price or ask for repairs.

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  • Daniel KentPro Member
    OP
    Rental Property Investor · Berlin, NJ · Member since 2016 · 83 posts · 23 votes
    7y

    Thanks @Nathan Gesner!

    Part of my concern if for some reason the inspection comes back with something that will increase my rehab costs, would I be able to walk away from the deal as well?

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  • Jason D.
    Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    7y
    @Daniel Kent if there is an inspection contingency in your contract, you can walk away based on the results of the inspection. "As-is" simply means that the seller has no intention of negotiating beyond the initial offer. Now, that being said, I've negotiated an as-is property after inspection after laying out the holding costs to keep the property vs. selling to me at a reduced rate.
    4Reply
  • Victor N.
    Investor · Wellington, KS · Member since 2016 · 256 posts · 188 votes
    7y
    It depends on what is agreed on in the contract. You control the terms in the first place by writing your inspection clause in your contract offer. Then it is up to the seller to decide whether to accept your offer.
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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    Yes, you can walk away from the deal. I've only glanced at the NJ contract but it appears to give you the right to inspect and then the right to negotiate or terminate the contract. 

    Are you using a real estate agent? They should explain this to your satisfaction when writing up the offer.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    Agreed....”as is” and having an inspection clause are not related to each other.

    1Reply
  • Randy Thomason
    Specialist · Little Rock, AR · Member since 2015 · 95 posts · 149 votes
    7y

    Hi Daniel,

    Yes, always have an inspection clause in your contract, even if you are buying "As, Is." This gives you the right to cancel in the event you find more repairs or the seller hid something from you that is detrimental.  And just because they say they won't negotiate doesn't mean they won't. It's a psychological thing for most people that once they have a fish on the line (you) they don't want to lose you.  Many times I have entered into an agreement like that and because of an inspection told the owner I had two choices, cancel the deal or change the sales price.  More often than not the price changed.  But also be willing to walk away. 

    Just like you are looking for motivated sellers, sellers are looking for motivated buyers.  If you are more motivated than them then you will almost always lose the negotiation. Many times I have politely got up from the table and wished the sellers well and started to leave before they called me back to the table with an agreement to change the price.  

    Happy Hunting out there!  But always dot your i's on your contract paperwork to protect your interest.

    2Reply
  • Daniel KentPro Member
    OP
    Rental Property Investor · Berlin, NJ · Member since 2016 · 83 posts · 23 votes
    7y

    Thanks everyone for all of the great info!  I will confirm with my RE Agent and my attorney to make sure my contract and inspection clause is correct!  I appreciate everyones feedback!  Happy New Year!

    0Reply
  • Austin Dickey
    Flipper/Rehabber · Indianapolis, IN · Member since 2018 · 17 posts · 5 votes
    7y

    @Daniel Kent

    I literally just did the same thing two days ago. An addendum was made for the inspection, just in case something major was wrong like foundation or busted pipes.

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  • Catherine Emert
    Realtor · Bend, OR · Member since 2018 · 323 posts · 224 votes
    7y

    We just went through this with a client of ours, they were willing to accept the property as is and actually weren't going to do an inspection. Even if you are accepting it as is it's a good idea to know as much about the property ahead of time as possible. You don't want any big surprises.

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  • Charles Kao
    Specialist · Grand Rapids, MI · Member since 2016 · 1k+ posts · 611 votes
    7y

    @Daniel Kent

    The buyers want you to do all that before you sign. Get the inspection now because if it says as is if you are backing out you are losing your EMD.

    0Reply
  • Joe P.
    Philadelphia, PA · Member since 2017 · 824 posts · 1k+ votes
    7y

    I just bought a duplex in Gloucester City, NJ being sold "as-is" and got an inspection. Not surprisingly, a few things came up. I told the seller thanks but no thanks, I know your selling as-is but the costs have exceeded the profit margin. We negotiated a bit on price so we were both still relatively happy.

    Make sure your inspector spends time on evaluating roofing, plumbing, electrical, etc. Think of your big ticket items and make sure those are the focus.  Make sure you check heating and cooling systems as well regardless of season, and have the inspector show you how those items work, e.g. if its a boiler. If something looks "old" don't be afraid to give a plumber or electrician $100 to look at something. Both boilers in the house I purchased are older than I thought, and probably need to be replaced in the next 5 years. They 'aint cheap, sadly.

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  • Stephen Karakitsios
    Rental Property Investor · Sicklerville, NJ · Member since 2017 · 17 posts · 8 votes
    7y

    @Daniel Kent

    Hey Dan, definitely have the inspection clause written clearly in the contract. It will save you money down the road and avoid any unforeseen headaches. I didn’t include an inspection clause in my offer and I just realized that I had to get a new furnace because the one in the property was illegal. The margins still look good because I used conservative numbers but just an example of things that could have been avoided. Good luck.

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