“As-Is” Does Not Always Mean “As-Is”

07 Feb “As-Is” Does Not Always Mean “As-Is”

The term “as is” means the property is being sold in its current condition – exactly the way it exists. Right?

Wrong – that is real estate fiction! 

The “as is” clause in a real estate contract isn’t quite as literal as it sounds. In today’s blog, we uncover the layers to this term and what it means for buyers and sellers. 

“As Is” Meaning

If an owner is selling property “as-is”, it means they are selling the property in its current state. So, there will be no improvements, repairs, or credits for repairs on the property being sold. 

What this means for buyers is that any problems in the home may be passed on to you.

Inspections Still Matter

An “as-is” transaction does not preclude the buyer from conducting a home inspection. 

When a seller lists their home “as-is”, it doesn’t change the legal rights of the buyer. Based on an inspection, the buyer still has the opportunity to raise concerns about the condition of the property and request the seller either make repairs, give a credit, or even reduce the purchase price. A buyer may claim these defects were not detectable at the time they signed the contract or cite “health and safety” reasons. 

Illinois Real Estate Rules for “As-Is” Contracts

An “as-is” contract does not mean the seller is not required to disclose issues they are aware of.

To avoid any liability claim, the seller should state all defects known to him or her in detail and in writing and fulfill all requirements of the Illinois Residential Real Property Disclosure Act.

Disclosure of defects is not required if you did not occupy the property or hired another person to manage the property. Hence, in an “as-is” contract in Illinois, the seller must typically fill out the Residential Real Property Disclosure Report form.

Sellers must answer questions pertaining to material defects in the disclosure form. In Illinois, it is not necessary to disclose non-material defects. 

Why List a Home “As-Is”?

There are a few circumstances under which property is typically sold “as-is”. For instance, a bank may have taken over the property through foreclosure and wishes to sell quickly.

In addition to a foreclosure circumstance, there are other reasons why a seller would list a home as-is. For example, the seller may be financially unable to afford to pay for repairs. Time is also a factor–a seller may not be able to wait for the completion of repairs or renovations. Sometimes a seller’s motivation isn’t repair-related at all. It could just be wanting to avoid the stress associated with repair related issues and aim for a quick sale. 

Bottom Line

When sellers list their homes for sale “as-is”, it’s likely they don’t want to be on the hook for repairs before closing. Buyers tend to jump at these listings because they feel like bargains, but beware the hidden problems that could turn out to be very costly. The best way to proceed is by working with an experienced real estate agent and attorney to help you with your transaction!

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