Sellers often tell me that they want to sell a property “As Is”. This is where we need to define what “As Is” really means to the seller. There are three possible interpretations.
One – “As Is” as it applies in the legal world means there is no “Warranty” included with the property, but this is not often what the owner is talking about.
Two – “As Is” most often means that they don’t want to do any preparation or make any repairs.
Three – “As Is”, however does not eliminate a seller’s duty to disclose.
One – “As Is” – No Warranty
This is real simple, as ALL properties are sold “As Is”, at least in the resale market. A new home is likely to have a warranty, much like a new car. Resale homes, ones previously owned, do not have any warranties. So when a seller states that they want to sell a home “As Is”, I reply “Yes, all homes are sold as is by default, so this is no problem”. But 9 times out of 10 this is likely not what they mean.
Two – “As Is” – I don’t want to fix anything
This is often what most owners mean when they want to sell a home “As Is”. This of course is not a problem either. As the only requirements for selling a California home are A) smoke detectors, B) Carbon Monoxide detector (one per floor), and C) Water Heater Strapping. Otherwise your home can be falling down and water pouring through the roof. Making zero changes to a home may however not be a the seller’s best interest.
While it is a seller’s option to sell their home in whatever condition they see fit, it may be in their best interest to freshen up the paint or do some general clean up. If I can help a seller net $2 or $3 for every $1 invested, I will make these suggestions. It may also be in the seller’s best interest fix an item that arises from the home inspection or to credit a small amount of money. Maybe there is an active plumbing leak that they would fix anyway. Small issues can also be addressed with a dollar credit. Maybe a $500 credit for the buyer to fix a couple of miscellaneous items, in exchange for them closing escrow and not backing out is in the seller’s best interest.
These two points are addressed under the topic of “How to Fix Up a Home for Maximum Profit” and “How to Negotiate Repairs Like Pro”.
Three – “As Is” – I don’t want to disclose or be liable for improper disclosure
It is very rare that a seller actively wants to hide things and deceive a buyer. More often than not, they fear being held accountable for conditions which they have no knowledge. They are under the false belief that selling “As Is” gets them out of the obligation to disclose. This is absolutely NOT the case. Simply stating that a home is being sold “As Is” does NOT remove the obligation of a seller to disclose conditions for which they are aware.
“Awareness”, “Significant Defect or Malfunction” and “Material Fact” are operative words when it comes to disclosure. The first two words “Awareness and “Significant Defect or Malfunction” are pretty self evident, but what is a material fact. A “Material Fact” is something that affects the value of desirability of a property. The bottom line is that if you are “Aware” of a “Significant Defect or Malfunction” or something that affects the “Value or Desirability” of the property, then you should likely disclose that item.
That sets a pretty high bar. You must be aware of the problem and it has to be significant problem and/or affect the value of the home. In over 30 years of business I have yet to have a buyer sue a seller for any reason, including fraudulent disclosure. So there is nothing to fear in disclosure, it actually greatly reduces and eliminates your liability.