Buying a house is like – | Bank rate

The U.S. residential real estate frenzy may be starting to calm down, but it remains a hot seller’s market out there — and in such a climate, house hunters often see properties listed for sale “as is.” “Selling a home as-is means selling it to someone with no obligation to repair or provide credit for problems with the property,” says Adriano Tori, founder and CEO of Seattle-based Rexmont Real Estate.

While that might suggest the benefit is on the seller’s side, a home like that can be beneficial to home buyers as well — though of course the caveats can be numerous. Here are all the pros and cons to consider.

What does it mean to sell a house?

Normally, there is a great deal of negotiation involved in real estate offers and transactions – a back-and-forth negotiation over what is offered in terms of the features and conditions of the home. As with houses, it’s more of a take-it-or-leave-it situation. When you buy a home, you’re typically getting a property that needs repairs and improvements, so the asking price reflects its current condition. Don’t ask for changes or repairs: what you see is what you get.

It may not be in tip shape, the actual condition of the house may vary. According to Tory, a home like a house can have minor problems like chipped paint or appliances that need replacing, or serious issues like water leaks, roof damage or mold.

An “as-is” home is not necessarily the same as a “fix-up,” although there is obviously some overlap between the two. “Fixer-uppers are properties that need significant maintenance and renovations, while older homes may need some cosmetic updates or minor repairs,” says Realtor Rinal Patel, founder of We Buy Philly Homes in Philadelphia.

Why do sellers offer homes?

Sellers offer homes for a variety of reasons. “Typically, you’ll find most homes listed by agents,” says Kathryn Mack, owner of Homebuyer Network. National Homes-buyer for money.

The seller may have other reasons for listing the home as-is, such as moving quickly, avoiding investing money, or not wanting to deal with defects.

Why buy a house?

Regardless of the seller’s needs, home sales offer many benefits to the buyer.

Cheap sale price

As-is homes are priced to sell. And since the current owner is unwilling to repair or negotiate, the buyer can usually get it at a bargain price. “This will save you money in the long run, especially if the maintenance isn’t very important,” says Patel, especially if you’re renovating. And of course, paying a little early can mean more appreciation in your pocket if/when you come to sell the home.

Fast transaction

Just like when buying a home, you can usually complete the transaction faster than usual. No protracted negotiations on purchase agreement or contract details. “Since the buyer knows what he is getting, and the seller knows what is expected of them, [you] Often get a quick sale and an expedited closing time,” says Robert J., owner/broker of RJF Group, a Central Texas real estate firm. Fisher.

Less competition from other buyers

Many buyers shy away from existing homes, assuming that they are at worst demanding, or older and more dated. So you’re less likely to get into a bidding war or get waltzed by someone with a better offer at the last minute.

More money for renovations

It’s a rare home that doesn’t require some customization. But if you pay top dollar for a new or completely renovated property, you may not have the money to renovate or make other changes.

Plus, “there’s a certain guilt associated with tearing down new cabinets just because you don’t like the way they look,” says Mark Severino, founder of Best Texas House Buyers of Dallas.

As-is home sales can take advantage of the savings on the lower sale price to make the home the one you love, without feeling like you’re overspending.

As there were obstacles to buying a house

Although there are advantages, there are also disadvantages to buying a house.

The house may have major hidden problems.

The big house needs more work than you think. That means your big issue is now an expensive problem that you have to pay to fix as the new owner. Even if a home inspection finds issues before closing, depending on them (more on that later) you can still go forward with the deal.

Finances can be challenging.

Financing a home purchase can be difficult – if the home has serious structural problems that affect health or safety. “If the buyer is getting a mortgage through the FHA or VA, and even some conventional products, some repairs will need to be completed before closing,” says Christine Conti, broker-owner of Peacock Premier Properties in Inglewood, Florida.

For example, an FHA-guaranteed loan must meet minimum housing guidelines from the Department of Housing and Urban Development (HUD). The house must be structurally sound, safe for people to live in, and healthy. Loans through the VA also have asset requirements. The heater must work, the roof must be sound and there cannot be any rot or fungal growth or lead-based paint, for example.

If the inspection ordered by the lender confirms such issues, you may be caught between a rock and a hard place, the seller will not fix them and you will not be able to get a loan without them. For this reason, many homebuyers pay off cash or hard money loans, as opposed to traditional mortgages.

Sellers are typically fickle.

Home sellers tend not to be open to contingencies, further offers or contract negotiations – that’s the point of offering the home as is. You can always try, of course, but don’t count on a lot of wiggle room or flexibility.

Tips for buying a house depending on the situation

Consider these tips before you start shopping.

Ask questions. Even if it’s a home sale, you can ask questions including why the home is being sold: is it an estate sale, the owners need cash quickly to buy another home, they don’t want a job, is the move-in ready, etc. Maybe your real estate agent can get skin from the seller’s agent. “This can give some insight into the condition of the home and whether or not necessary repairs are necessary,” Patel said.

Don’t neglect disclosure. In most states, “unless the property is a rental or an inheritance, the seller must disclose anything they know is wrong with the home,” says Jimmy Hughes, a broker with JMR Realty in Oklahoma. Selling a home as-is does not absolve the homeowner from this legal obligation, especially when it comes to some serious issues. According to Thomas Satas, founder and CEO of Windy City HomeBuyer, “Declaration rules usually cover all home systems. [including] Any type of infestation, the roof, the foundation and the presence of toxic substances such as lead paint, asbestos or radon.

Check with your local real estate agent about which codes, health and safety declarations are required in the state where the property is located. If you have problems with the home, you can ask the seller to fix them regardless of the condition. (or walk away from the deal).

Know what to put in the contract. “A home purchase contract should clearly state which items are included in the sale of the property,” including furniture, fixtures and fittings, says Bodie Rudy, associate broker at DwellingsMI. “Including a complete and accurate inventory in the contract will help protect both parties if something is damaged or lost after the sale is complete.”

Get a home inspection and/or contractor evaluation. Even if your lender doesn’t require it, a home inspection is something all of our expert sources agree is important when buying a home. “Home inspections are done before a property is offered, while contractor appraisals are usually done afterward,” says Rudy. A home inspection is more thorough, but costs more, while a contractor’s appraisal is cheaper but may not be as comprehensive.

Even if sellers aren’t crazy about contingencies, insist on making a home inspection part of a non-negotiable contingency clause. That way, if the inspector reveals major problems like a cracked foundation, you can back out of the contract. Even if you spend the cost of the inspection — usually $300 to $800 on average — “it’s worth it if you don’t wind up with hundreds of thousands of dollars in unexpected repairs,” Mac advises.

Ask for home insurance. There is some debate if a home warranty is worth it or if it’s a possibility as a home sale. “Buyers can ask for a home warranty, but that’s not usually included in residential properties,” Hughes says. Still, it doesn’t hurt to ask the seller to buy one for you, or at least for themselves until closing. In addition to home insurance, there are other ways to get coverage for items, such as using a credit card with warranty benefits.

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