Often times people ask if selling a home ‘as is where is’ is the best option for them. Usually what they are asking is if they need to make improvements to the home prior to listing it for sale. They have heard reference to the phrase selling a home ‘as is where is’ in relation to real estate sales before and are not entirely clear on the actual meaning of the term. Many professionals are also confused about what it actually means to list a home or property for sale ‘as is’.
A home can always be listed for sale in an ‘as is’ state. If the home owner does not wish to complete any repairs or upgrades to the property prior to listing it for sale, that is fine. Sometimes however, a few hundred dollars in repairs can net a few thousand dollars in profit. It’s always best to at least tackle the basics before listing- cleaning, painting, light fixtures and window coverings- that type of thing. However, it is not necessary and is at the discretion of the home owner. Some ways to give an easy facelift to a ‘tired’ home are addressed in my Blog Post Getting a Dated Home Ready for Sale in Thunder Bay.
From the perspective of a real estate agent, selling a home ‘as is where is’ comes with a bit of a different meaning and is generally related to the information provided or not provided on the Seller Property Information Statement, which within the Thunder Bay Real Estate Board is a mandatory component of any listing package.
The Seller Property Information Statement, for those that are not aware, asks a series of questions regarding both the current and past state of the building and property which is to be listed for sale. It is a means of providing correct information concerning the property to buyers, who must still make their own enquiries. It is not designed to be a warranty.
That said, if the Seller is not in a position to answer the questions on the Seller Property Information Statement from a position of knowledge and accuracy, it presents a challenge that is often addressed by stroking the form and writing ‘As Is Where Is’. Instances where this might take place would be in a Power of Sale situation, a situation where the Seller rents out the property and hasn’t physically been in it for a long period of time and therefore might not be aware of any potential problems, or perhaps when there is a cognitive challenge that prevents the Seller from understanding or recalling pertinent facts.
Stroking the Seller Property Information Statement is never ever to be used as a means to conceal unseen defects (latent defects) that can not be easily observed by a Buyer. For instance- leaking basements, structural issues, concealed hazards, that type of thing. Latent defects must be disclosed it the Seller is aware of them.
Buyers still have the right to make their own enquiries regarding properties that are being sold ‘As Is’. It is not acceptable to assume that because you are selling your property ‘As Is’ that buyers will not want to make further enquiries to protect their interests. Conditions of home, water, sewer, electrical, retrofit, and other types of inspections are often commonplace when submitting offers on ‘As Is Where Is’ properties.
Seller Property Information Statements are one of the largest sources of legal liability in the Real Estate Process. Ensuring that you are disclosing defects to buyers is the best way to prevent a legal land mine and allowing buyers to complete inspections within the offer process is an important means of preventing unknown issues from developing into potentially expensive legal claims.