Buying a House “As Is”
Q: We recently sold our house to a buyer “AS IS“. We were only on the market for about a week and had 3 offers. All were over the asking price, and we accepted the highest one. We did counter the buyer back insisting the offer be “AS IS”, and they accepted. Now the buyer had done their inspections, and they are coming back and asking for some repairs. Can they do that? We are not happy about this and want to cancel the deal. What should we do?
A: There is a lot of confusion about “AS IS” contracts. While every seller wants to sell their house “AS IS”, meaning they don’t have to pay for any repairs, the contractual process can be a bit tricky. The basic Purchase Agreement (CAR version, which is almost always used) is essentially an “AS IS” contract in that the seller is not obligated to do any repairs to the property, other than making sure it has smoke detectors, and carbon monoxide detectors and water heater strapping. Otherwise, the seller is under no obligation to complete any repairs and is perfectly within their rights to refuse to do any. However, the contract also provides the buyer the opportunity to inspect the property and request any repairs they would like to seller to undertake. The buyer does have the right to cancel if there is no satisfactory resolution of the repair issue in most cases.
Most of the time there are two negotiations in a home sale: The original price, and then any repair items. So yes, the buyer has the right to request repairs, even if it is an “AS IS” sale, and no you do not have to agree. However, you need to consider what the outcome is if you do indeed refuse to do any repairs, and the as-is buyer cancels the contract. Are there other buyers who will pay the same or even a higher price? Are you sure? I have seen this situation unfold many times throughout the years, and sometimes sellers end up at a lower price with the new buyer (and even having to do the repairs you were refusing to do with the first buyer). So as with any negotiation, be sure you understand what the other possible outcomes are if you decide to hard-line the buyer on repairs.
If you as a seller truly want an “AS IS” sale where you don’t have to do any repairs, it is best to get all inspections completed before you go on the market and provide all disclosure documents to the buyer prior to the buyer writing an offer. In that scenario, the buyer has the opportunity to investigate and understand what they are buying beforehand and can be more confident if they write an “AS IS” offer. If you do not have any inspections completed before you go on the market, then there are certain issues that may arise out of the inspections that the buyer, and perhaps even you, are not aware of. In this case, it would be hard to fault the buyer for requesting the repair. Again, what your stance is with regards to requested repairs will depend a lot on what your other options are with other potential buyers.