February 17th, 2012 categories: Real Estate Tips
Often, when a Seller receives an “as is” offer on his home in St Petersburg, his first thought is, “Great. That means I won’t have to make any repairs.” Well, not necessarily.
In most cases the contract will provide for the buyer to have a home inspection done. In the typical Florida FAR/BAR contract, there is a clause that “If Buyer determines, in Buyer’s sole discretion, that this property is not acceptable to Buyer, Buyer may terminate this contract”. So, it’s correct that the Seller isn’t obligated to make any repairs, but the buyer also isn’t obligated to buy the property. Rather than just walking away, (though that happens sometimes, too) the Buyer may point out things that he’s not satisfied with and offer to go ahead with the purchase if the Seller fixes certain things, or if the Seller reduces the price or gives a credit for certain repairs. This often leads to a second round of negotiating. In effect, then, with an “as is” contract, the buyer is getting a 10 day “free look” at the property, to decide if he really does want to buy this house for the price already agreed upon.
In addition to buyer requests, other parties may get involved in repair issues. If the purchase is subject to a loan, the underwriter – who often doesn’t get involved until a day or two before closing – may require certain repairs to be done before closing, even if the buyer and seller have agreed that those repairs don’t need to be done.
The insurance company may also get involved. On older homes, the insurance company will require a “four point inspection”. The insurer may object to the type of wiring in a house, or the estimated remaining life of the roof (even though the roof doesn’t leak). If the purchase is subject to a loan, the lender will require insurance on the home. If the insurer won’t insure without the repairs, the lender won’t loan the money, and the closing won’t happen.
Discussion: No Comments »|